Likely determinants for an increase in demand of houses in the UK. Watch

000alex
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Hi,

For that question I talked about consumer confidence.

For example if on the news it was announced that the economy is improving then consumers will be more confident about spending their money rather than saving it and they may spend it on a house which increases the demand for houses.

Is the way I'm explaining why correct?

Also the mark scheme didn't say anything about consumer confidence:
 rise in income
 fall in interest rates/availability of credit
 price and availability of substitutes (rented property/houses
abroad)
 taste & fashion
 rising population
 change in demographics –more households
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JoelHopkins
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I don't think you would get full marks for that. You would need to link it to lower interest rates or perhaps a change in fashion and trends i.e. more confidence. But the most obvious answer would be to talk about increasing population
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IanBaxter95
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You can definitely make the point that because the media has stated that house prices are rising, people will have increased confidence and increase spending on new or used homes which will increase the demand for housing, shifting demand to the right and increasing prices. However house prices are not increasing all around the UK, in London house prices are on the rise, but it could definitely be argued that this is not demand from UK residents, rather than rich entrepreneurs from foreign countries who own many housing for business purposes, Russians would be an example.
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PaulKrugman
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I'll throw in some current context that an examiner would be pleased to see. The two main schemes regarding housing are the BoE's Funding for Lending Scheme (suspended in regards for mortgages back in January) and to gov's Help to Buy scheme. Up to you to do some wider reading around what they involve.
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lilixxx1000
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I think an important point on the mark scheme is the price of substitutes. If the price of rent increases then demand will increases for buying houses because they had a positive XED.
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username33685
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Don't complicate things, go for the obvious, direct effects. Consumer confidence is more an indirect effect of rising incomes and a stable economy, not a reason in and of itself.
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