The Economics of the Property Market Assignment

Q1. Explain the difference between a unit, townhouse or house.

A unit is a little house normally located in a block with similar houses. A house is normally one degree while a townhouse has 2 or 3 degrees with sleeping rooms on the top and the kitchen and life room on the bottom floor. They both have a forepart and backyard and a garage.

Q3. Look at your graph. Explain the jurisprudence of demand. In other words, explain the relationship between demand and monetary value.

When something is priced lower, there is a greater demand. There is a larger sum of bidders for a cheaper belongings.

Q5. Look at your graph. Explain the jurisprudence of supply. In other words, explain the relationship between supply and monetary value.

When the monetary value of something is higher, there is a greater supply. Sellers want to sell their belongings for the highest monetary value possible. There are more belongingss available at a greater monetary value.

Q6. Now put the two diagrams together. Identify the equilibrium point and measure for belongings. Explain why the point at which the demand and supply curves intersect is known as the ‘equilibrium point ‘ .

The equilibrium point is the point at which the measure supplied meets the measure demanded. The belongings that is priced at $ 350,000 will be in equilibrium since the measure supplied is 4, and the measure demanded is 4. They equal which means that is the equilibrium point.

Q7.If the belongings was set at $ 250,000 would at that place be a deficit of excess of belongingss? Explain your reply. Then see, “ What will go on to the monetary value of belongingss as a consequence of this deficit or excess ” ?

At $ 250,000 there would be a deficit of belongingss, as merely 2 are supplied at that monetary value. The monetary value will increase as there are 8 people offering for this belongings.

Q8.If the belongings was set at $ 450,000 would at that place be a deficit of excess of belongingss? Explain your reply. Then see, “ What will go on to the monetary value of belongingss as a consequence of this deficit or excess ” ?

At $ 450,000 there would be a excess of belongingss, as there are 8 belongingss supplied. As merely 1 individual is prepared to buy at this monetary value, they would hold more “ bargaining power ” to negociate and be able to convey the monetary value down.

Q9. Describe two factors of demand, other than the monetary value of belongingss, which might promote clients to demand more belongings.

Other factors that could impact demand on belongingss could be the location of the belongings such as propinquity to local schools, public conveyance and recreational installations. Another factor could be involvement rates as lower involvement rates would promote people to take out a loan.

Q10. The authorities is offering a grant of $ 20,000 for all first-home purchasers. Explain how this authorities policy could impact on the monetary value of belongingss in the Estate.

The authorities grant of $ 20,000 would increase the monetary value of belongingss in the Estate. First place purchasers have more money, which would perchance intend they could afford to pay more for lodging. This would so increase the concluding sale monetary value of places since everyone ‘s got excess money to pass. While good intentioned, the policy has increased the monetary values of houses.

Q11. Find the lowest fixed and variable rate that you are able to happen with your state of affairs. Why does a fixed rate loan have a higher involvement rate than a variable involvement loan? A ) Describe the relationship between the loan sum and the entire involvement payable. B ) Describe the relationship between the loan sum and the monthly refund. C ) Describe the relationship between the involvement rate and the entire involvement payable. D ) Describe the relationship between the term of the loan and the entire involvement payable.

The lowest fixed rate was BankWest ‘s 3 twelvemonth fixed loan at a rate of 6.94 % . The lowest standard variable rate was Reduce Home Loan ‘s Standard Variable at a rate of 6.44 % . A fixed rate loan has a higher involvement rate than a variable loan because it can assist protect people from the hazard of higher variable involvement rates. If there is a greater screen of hazard ( such as a longer fixed rate term ) , there will be a higher fixed involvement rate.

If you borrow more, you will besides pay more involvement in the long tally.

If you borrow more, you will evidently necessitate to do higher monthly refunds.

The higher the involvement rate, the more involvement you will pay in entire.

The longer the term of the loan, the larger the entire involvement payable.

Q12. Given the undermentioned loan options, choose the most appropriate loan option for you. Justify your reply.

The most appropriate loan option would be the Reduce Home Loans Standard Variable loan as it has the lowest involvement rate and a lower monthly refund.

Q13. Sketch the advantages and disadvantages of make up one’s minding to lease over buying a belongings. Use a cost-benefit analysis to explicate your determination.

The advantages of leasing are that refunds are normally fixed and you will non necessitate to worry about altering refunds due to involvement rates, you have more flexibleness since you have a shorter renting term and there is less hazard to you financially. The disadvantages is that you will non profit from an addition in value of the place, trade with sometimes ‘uncooperative ‘ landlords and that leasing is non every bit stable as having a place outright.