Rent or buy? The challenge of access to housing
Rent or buy? The challenge of access to housing

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5.2 The housing market – external influences

Now that you have examined how house prices and quantities of buyers and sellers influence each other, it is also possible to look at external factors affecting either prices or quantities demanded and supplied, which may change the equilibrium position.

Activity 16 The effect of selected changes on the housing market

Timing: Allow about 30 minutes

Watch Video 4, which is the second part of an explanation of the model step by step. It looks at additional factors that may affect the market equilibrium, starting from where we left the model at the end of Video 3. Once you have viewed the video, answer the following question.

Download this video clip.Video player: Video 4: Using a model of demand and supply to understand house prices – Part 2
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Video 4: Using a model of demand and supply to understand house prices – Part 2
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Look at Figure 15. The three statements on the right are positioned against the wrong diagrams. Drag each of the statements to the correct demand-and-supply diagram. When you are happy with your answers, select Submit.

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Figure 15  External effects on house prices and quantities demanded and supplied
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