$20 Bonus + 25% OFF
Securing Higher Grades Costing Your Pocket? Book Your Assignment at The Lowest Price Now!


Discuss about the Demand and Supply of Housing.




The theory of demand and supply is one the basic concepts of economics which form the backbone of the market economy. Demand is the quantity of a commodity that buyers in a market desire. The quantity demanded is how much of a product (good or service) that buyers are willing and able to purchase at a given price in the market. This interaction between the quantity demanded and the price gives the demand relationship. On the other hand, supply refers to how much the market can offer. The quantity supplied is the amount of a commodity that sellers are willing and able to bring to the market at a particular time for all the given prices to give the supply relationship. Demand and supply therefore, reflect the price of the commodity (Salvatore, 2011).

The quantity demanded of a commodity is affected by its price. When all other factors are held constant and the price of a normal commodity increases, the demand for it will reduce because now the consumer will have to pay more for it. The opposite happens when the price reduces while the other factors remain constant. This implies that price is inversely related to the quantity demanded. Increase in price causes a decrease in demand and vice versa.

Another factor affecting demand include changes in the disposable income of the consumer. When the disposable income of consumer increase, they are able to afford more of the commodity hence the demand will increase. Demand also increases when the quality of a good is improved and advertising of the product that will lead to consumers building brand loyalty. Other factors include seasonal changes, future expectations of changes in the price of the commodity, and changes in the prices of other related commodities. Commodities can be related as either substitutes or complements.

Supply is also affected by the price of the commodity. When the price of the commodity is high, the sellers will be willing to bring more to the market to maximise on revenue receipts and vice versa. Other factors include changes in the cost of production, expansion of the production capacity or entrance of other producers into the market, changes in the supply of other related goods, seasonal and climatic changes, technological changes, and government policies like taxation and subsidies.


Demand for and Supply of Housing

Similar to all other market in any economy, the law of demand and supply applies in the housing market. The market for houses involves buyers who are willing to pay for houses at a given price and sellers who are the investors and developers who are willing and able to supply houses to the buyers for a given price. The market forces of demand and supply come into play in the housing industry where the buyers will offer a price for a house and the seller may accept the offer or reject. Where supply meets demand, we will have an equilibrium price and quantity of houses. When the demand for houses equals the supply, we say the housing market is in equilibrium and the market will clear. At equilibrium, all the houses that are supplied to the market will be bought and there will be no shortage or surplus of houses (Farmer, 2007).

The demand for housing is affected by the price of houses and their affordability. When the general prices of houses are high, it may not be affordable to some households. Such household may opt to live as communities. This reduces the quantity of houses demanded. Affordability of a house relates the income of a household to how much the household is willing to spend on residential housing. Housing affordability is different from affordable housing in that affordable housing refers to low-income houses or community housing, while affordability is a concept that relates income and expenditure of households. The income of households can increase due to higher productivity or due to increase in the prices of exports. When the households have a higher income and are willing to spend more on houses then the houses become more affordable and the demand will increase.

Population growth will lead to increase in demands. The population growth in our country is high and therefore there is a high demand for houses especially in the young people who are looking for jobs. Population is increasing due to immigration by workers looking for job opportunities. However, population can reduce due to people marrying later or bearing fewer children, divorce and separation. Such factors could lead to the demand of houses reducing (Gruis & Nieboer, 2010).

When households have easy access to credit facilities, their demand for houses could increase. Ease of access of credit facilities such as loans may be made possible by reducing interest rates or financial deregulation. This makes acquiring loans from banks and non-bank financial institutions easy for households. In addition, the households can afford to pay back their loans. Financing for the purpose of home acquisition will increase the demand for houses including the trend that is now popular for households purchasing homes for speculative purposes (Gruis & Nieboer, 2010).

The demand for housing is relatively inelastic. Price elasticity of demand is the responsiveness of price to changes in demand. When the price increases, the demand will not fall by a big percentage. This is because housing is essential and a tenant will not vacate a house simply because rent has increased.

Similar to demand, the supply of houses is affected by their price. When the prices are good, developers will be willing to build more house units so that they can maximise on revenue. Price of houses is determined by demand. When the demand is high, houses will fetch a good price in the market, the profits will be high, and the developers will supply more houses to the market. Contrary to this, low prices in the market could lead to restrictions in construction of buildings hence a further reduction from the initial brought by low prices. Other factors affecting supply include the attitude of the locals in the area concerning the construction of new homes, and the regulation on the use of land. Government policy include subsidy of construction for low-income houses and the capping of rent by the rent tribunal. This helps to shift the demand curve to the right and ensure that there is no shortage of housing facilities.


The demand and supply of houses works like that of any other market in the economy, where the forces will determine the equilibrium price. At this price, both the buyer and seller are satisfied and there is market clearance. The price of houses is the underlining factor that will determine both demand and supply. Other factors is the availability of credit to both the tenants and the developers that will determine the demand and supply.

The government works to ensure that there are no inefficiencies in the housing market. It regulates the rent and provides subsidy for low-cost housing to ensure both affordability and surplus. Regulation is meant to protect the tenants from exploitation by property owners.



BEARDSHAW, J. (2001). Economics: a student's guide. Harlow, Pearson Higher Education.

BEGG, D. K. H. (2013). Foundations of economics. London u.a, McGraw Hill Education.

BEGG, D. K. H., & WARD, D. (2016). Economics for business.

FARMER, R. E. A. (2007). Aggregate demand and supply. Cambridge, Mass, National Bureau of Economic Research.

GRUIS, V., & NIEBOER, N. (2010). Asset management in the social rented sector: policy and practice in Europe and Australia. Dordrecht, Netherlands, Kluwer Academic Publishers.

HEALEY, J. (2016). Housing affordability. Thirroul, N.S.W. : Spinney Press

HEALEY, J. (2009). The housing crisis. Thirroul, N.S.W., Spinney Press.

MANKIW, N. G., CROUSHORE, D. D., & STULL, C. A. (2009). Principles of economics. 1, 1. Fort Worth [u.a.], Dryden Pr.

NWOGUGU, M. C. I. (2011). Risk in the global real estate market: international risk regulation, mechanism design, foreclosures, title systems, and REITs. Hoboken N.J., John Wiley & Sons.

PETTINGER, T. (2017). Factors affecting supply and demand of housing | Economics Help. [online] Available at: [Accessed 11 Apr. 2017].

PHILP, B., WHEATLEY, D., GALT, V. (2009). Business Economics, Unpublished Course Notes, Nottingham Trent University, pp. 9-15.

VARIAN, H. R. (2014). Intermediate microeconomics: a modern approach.

VICTOR, P. A. (2013). The costs of economic growth. Cheltenham, UK, Edward Elgar Pub. 

PHILP, B., GALT, V. (2009). Business Economics, Unpublished Course Notes, Nottingham, Nottingham Trent University p 2.

SALVATORE, D., & SALVATORE, D. (2011). Microeconomics. New York, McGraw Hill.

SLOMAN, J. (2005). The economic environment of business. Harlow, England, Financial Times Prentice Hall. 


Cite This Work

To export a reference to this article please select a referencing stye below:

My Assignment Help. (2018). The Demand And Supply Of Housing. Retrieved from

"The Demand And Supply Of Housing." My Assignment Help, 2018,

My Assignment Help (2018) The Demand And Supply Of Housing [Online]. Available from:
[Accessed 19 February 2020].

My Assignment Help. 'The Demand And Supply Of Housing' (My Assignment Help, 2018) <> accessed 19 February 2020.

My Assignment Help. The Demand And Supply Of Housing [Internet]. My Assignment Help. 2018 [cited 19 February 2020]. Available from:

Getting nightmare regarding pending chemistry assignment? Then it is high time you consider hiring chemistry assignment help service of We at deliver quality subject specific assistance on more than 100+ subjects. For us, students' need is foremost, and we work round the clock to offer science, humanities and commerce assignment help. Among Commerce wing, our one of the most popular services is capital budgeting assignment help. In science segment, we have gained popularity with biology assignment help.

Latest Economics Samples

JSGS805 Economics For Public Policy Analysis

Download : 0 | Pages : 3

Answer: Point E* represents the equilibrium point. At any other price that is higher or lower than the  equilibrium price,  the supply and demand  forces will  come into play and bring the price back to the equilibrium market price, P*. At any price that is higher than the equilibrium price, producers would increase the quantity supplied, and the consumers would decrease the quantity demanded. It would resu...

Read More arrow

ECO203e International Economics System

Download : 0 | Pages : 6
  • Course Code: ECO203E
  • University: Singapore University Of Social Science
  • Country: Singapore

Answer: Given the information in table 1, it is observed that US can produce 5 bottles of per unit of labor hour while UK using the same labor hour can produce 15 bottles of wine. As UK can produce more bottles of wine using the same labor hour, UK has an absolute advantage in wine production. Using 1hour of labor US is able to produce 20 yards of cloth. US produces 10 yards of cloth using the same labor. US thus possesses an absolute advantag...

Read More arrow

BUSN 5620 Current Economics Analysis

Download : 0 | Pages : 4
  • Course Code: BUSN 5620
  • University: Webster University
  • Country: United States

Answer: Problem 1 After analyzing article ‘Improved Living Standards’ scenario, life expectancy and death rate has been Identified as two items on the list, which contributes to the GDP rate. It has been observed that life expectancy has been increased in the U.S, whereas the death rate has been reduced. In this context, more birth rate can increase the population of a country. Hence, more population indic...

Read More arrow

BUECO5903 Business Economics

Download : 0 | Pages : 5
  • Course Code: BUECO5903
  • University: Federation University Australia
  • Country: Australia

Answer: Introduction As is shown by the graphs above, both forms of externalities give rise to allocative inefficiency. In both diagrams, the market will produce at the point where Qd=Qs, which happens in both diagrams at the point P1, Q1. Nevertheless, allocative efficiency happens where MSB = MSC and not at the point where Qd = Qs (Pérez Herrero, Brunel, & Marlot, 2016). Therefore, the allocative efficient production level take p...

Read More arrow

MAE101 Economic Principles Trimester 2 2018

Download : 0 | Pages : 5

Answer: In business, disruptive technology infers an innovation that establishes a new market creating a network value (Christensen, Raynor and McDonald 2015).Disruptive technology displaces an established technology and shakes up the industry. It could be defined as ground-breaking product that creates a completely new industry.   New technology can be of two types: Sustaining and disruptive. Sustaining technology relies...

Read More arrow

Save Time & improve Grades

Just share your requirements and get customized solutions on time.

We will use e-mail only for:

arrow Communication regarding your orders

arrow To send you invoices, and other billing info

arrow To provide you with information of offers and other benefits




Overall Rating



Our Amazing Features


On Time Delivery

Our writers make sure that all orders are submitted, prior to the deadline.


Plagiarism Free Work

Using reliable plagiarism detection software, only provide customized 100 percent original papers.


24 X 7 Live Help

Feel free to contact our assignment writing services any time via phone, email or live chat.


Services For All Subjects

Our writers can provide you professional writing assistance on any subject at any level.


Best Price Guarantee

Our best price guarantee ensures that the features we offer cannot be matched by any of the competitors.

Our Experts

Assignment writing guide
student rating student rating student rating student rating student rating 5/5

230 Order Completed

97% Response Time

Liya Han

Master Of Science in Geotechnical Engineering (MSc Geotec)

Singapore, Singapore

Hire Me
Assignment writing guide
student rating student rating student rating student rating student rating 5/5

752 Order Completed

100% Response Time

Hugh Cleave

Masters in Human Resource Management (MMgt, HRM)

Wellington, New Zealand

Hire Me
Assignment writing guide
student rating student rating student rating student rating student rating 5/5

755 Order Completed

95% Response Time

Douglas Cowley

Masters in Finance with Specialization in Audit

Wellington, New Zealand

Hire Me
Assignment writing guide
student rating student rating student rating student rating student rating 5/5

1265 Order Completed

97% Response Time

James Cook

Masters in Management

Wellington, New Zealand

Hire Me

FREE Tools


Plagiarism Checker

Get all your documents checked for plagiarism or duplicacy with us.


Essay Typer

Get different kinds of essays typed in minutes with clicks.


GPA Calculator

Calculate your semester grades and cumulative GPa with our GPA Calculator.


Chemical Equation Balancer

Balance any chemical equation in minutes just by entering the formula.


Word Counter & Page Calculator

Calculate the number of words and number of pages of all your academic documents.

Refer Just 5 Friends to Earn More than $2000

Check your estimated earning as per your ability




Your Approx Earning

Live Review

Our Mission Client Satisfaction

Fast and good work done. It was up to mark and written in a good flow while following the instructions asked by me. The agent was also very helpful.


User Id: 374142 - 19 Feb 2020


student rating student rating student rating student rating student rating



User Id: 249413 - 19 Feb 2020


student rating student rating student rating student rating student rating



User Id: 249413 - 19 Feb 2020


student rating student rating student rating student rating student rating

Excellent JOB! I GOT AN A IN THIS assignment I AM VERY satisfied. THANK YOU VERY MUCH I appreciate YOUR HARD WORK.


User Id: 249413 - 19 Feb 2020


student rating student rating student rating student rating student rating
callback request mobile
Have any Query?