Answer to Question #314924 in Microeconomics for Ola

Question

discuss how the low of supply and demand affects the housing market with the Uk in general (use graphs to reinforce the answer)

Answer 1

The law of supply and demand dictates the equilibrium price of a property. A low supply or housing inventory may drive prices up, which is what tends to result in bidding wars. A specific property may be in demand by multiple parties who all try to outbid each other by increasing their purchase price offer.