Answer to Question #189821 in Microeconomics for REGIN MILTON

Question

(a) What are the major drivers of rising house prices in Darwin. 

(b) Using an appropriate diagram, explain your answer in part

c) How will the widespread availabilty of vaccines impact the housing market in future.

Answer 1

a) Overpopulation and globalization are two common causes of increasing house prices that we are aware of. As a result, the demand size of house buyers is growing in housing markets. However, the number of houses available does not match the number of people searching for new homes. As a result, there are more customers than sellers, making it more difficult and costly to purchase a home. Another cause for increasing house prices that is seldom mentioned is the affordability of a buyer's money/income to purchase a home. Houses are rarely paid in full or in cash by homeowners. Buyers also take out loans to purchase a house, such as housing mortgages, with the intention of repaying them over time. Essentially, homeowners are most likely to purchase homes with loans. House sellers will ask high rates for their homes as long as banks or brokers are able to continue lending loans, and house buyers can continue to buy. As a result, prices are expected to rise.

b)

c) The vaccine will make it safer for people to purchase houses and visit various ones. As a result, interest in purchasing a home will rise. Furthermore, the rise of remote work may encourage others to purchase homes that enable them to work more ergonomically at home. Houses will sell at a faster pace than they do now due to the pandemic, particularly because many people have put off buying a home because of the pandemic. However, as demand rises, so do rates, making it more costly to rent or purchase a house.

References.

https://edition.cnn.com/2020/11/18/success/vaccine-real-estate-new-york-city/index.html