Sample Essay on Factors Affecting Demand and Supply for Housing

Demand and Supply for Housing

Every person in the world deserves a better home. Many governments in the world have come up with great housing initiatives to ensure there are good homes for their citizens. Most of the cities in the world have stocks of housing. This includes flats, maisonettes, bungalows and privately rented houses among others. Nevertheless, there are a number of factors affecting demand and supply of housing.

The real property market has gone through widespread changes over years. There have been great developments in the sector and many investors are earning good money from their investments. Market, demand and supply are key issues that have impacted the growth of the real estate sector. These factors have helped determine the pattern of allocation of interests and resources in land utilization. In addition, these factors have impacted demand and supply shape and elaborate how technology demand and prices substitute as a change in price of resources.

The catastrophe of the housing sector supply to match the rising demand has brought in wide social and economic intimations.  The key reason for the rising demand for houses in many countries include improved expectancy rates and the large number of one-person households. Poor housing has impacted residents’ health and chances of attaining good education. Difficulty in accessing affordable houses has made it hard for many citizens to move out and find paying jobs. Essentially, here are a number of factors affecting demand and supply for housing;

  • Affordability

With increasing income, many people have been able to afford and spend certain amount on houses. Demand for housing has always risen during times of economic growth. Demand for housing has been a luxury good for many years and rise in income has caused vast rise in demand.

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  • Interest rates

Interest rates help determine the cost of housing or mortgage interest settlements.  An increase in interest rates to a certain percentage will lead to a decline in demand for housing. Low interest rates have invariably spurred more people to buy homes.

  • Population

Demographic changes have influenced the number of people buying homes. A large growing numbers of people living alone have pushed the demand for more houses higher.

  • Government regulations and policies

Government rules and legislation can impact the supply and demand of housing in a number of ways. Firm regulations for planning approval of new house building may discourage investors.  Better and relaxed housing policies will encourage building and related services.

  • Unemployment and economic growth

Falling unemployment and higher economic growth have all led to an increase in demand and supply of houses. On the other hand, rise in unemployment have made it hard for people to access houses or mortgages or enter the property market.

Factors such as consumer confidence, mortgage availability, cost of renting and rate of inflation have all impacted demand and supply of housing in one way or another. Housing market represents the biggest single purchase and largest part of individual wealth. Interestingly, changes in house prices have considerable effects on the rest of countries economy. Hence, it is wise to make exceptional decisions while planning on housing investment.

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