Market Failure in the Housing Market

I am writing a series on problems facing the UK economy at my other blog economics essays. The most recent post was a look at the problems facing the UK Housing Market

• In particular we have a situation where many young people are struggling to be able to afford to buy housing creating inequality. Housing could also be seen as a merit good.
• Price Instability. Because supply of housing is inelastic any change in demand causes a big change in price. Many are now predicting house prices could fall, although at the moment, prices seem to just be stagnating.
• The housing Market has a significant impact on the wider macro economy. Falling house prices could contribute towards a recession.