Prices Of Houses Essay

2519 words - 10 pages

I have been asked to investigate a question similar to "˜What determines the price of a particular good or product'. I have chosen to answer the question,What determines the price of houses? I have also come up with a hypothesis related to my question, later in my investigation I will either prove or disprove this theory. My hypothesis is,House prices are mainly determined by mortgage rates.To collect my information I will use a wide range of resources. These will be: · The Internet, particularly specialised sites dealing in economics (e.g. www.bized.ac.uk,www.moneyextra.co.uk) · I will try to arrange an interview with someone working within a bank or an estate agent. I will hope to gain a lot of information from these two sources · I will create and use a questionnaire and ask about 2 0/30 people, with a mortgage the questions on the questionnaire. This is because if I asked someone of my age what they thought, the set of results I would be getting back from my questionnaire would not be as accurate as they could be if I asked someone who owned a mortgage.· I will try to use as much of my class work as possible. I will need to look at my notes on Demand and Supply.Main Analysis I will start by looking at the main determinants for the supply and demand.A table to show the main determinants for the supply and demand Determinants of demand Determinants of supply Price of the good / service Price of the good / service Income Costs of producing the good / service Price of substitutes / complements Objectives of the firm Tastes Profitability of alternative products Expectations of future price changes Shocks With the buying and selling of houses there may also be additional factors that affect people's supplying or demanding decisions. The main determinants of the demand and supply of houses include: A table to show the main determinants of demand and supply for houses Determinants of demand for houses Determinants of supply of houses Price Price Income / level of economic activity The price of land The level of rents The cost of building materials Interest rates (mortgage rates) Expectations of future price increases The ratio of income to house prices There are also other factors to take into account that effect the demand for a property, these are · It's size · It's age . It's location Buying a house takes far more money than most people usually have available, and so they often have to borrow a loan from a bank, building society or other financial institution for the purchase of a house. The loan is usually secured against the property; meaning that if the borrower fails to meet the loan payments the lender can repossess the property to recover their money.There are four main types of mortgage rate: Variable Mortgages: Most mortgages are taken out at variable rates of interest. This means your lender sets an interest rate and from time to time this will be...

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