Housing Market for AQA Unit 3

The Housing Market is a synoptic unit, meaning that it incorporates both micro and macro economic material taught in unit 1 and unit 2. To some extent, you can very well on this paper as long as you have understood all the main principles of unit 1 and unit 2.

There is a long list of terms for the Housing market, which will be helpful for dealing with specific issues.

Macro Questions on Housing Market

It is important to be able to understand the impact of house prices on the macro economy.

  • The main thing is that rising house prices causes a positive wealth effect increasing consumer spending.
  • Falling house prices cause a negative wealth effect and will cause lower consumer spending.
  • DON’T say rising house prices means people can’t afford them therefore spending and economic growth falls

Evaluation of Housing Market

To get a really good mark for this kind of question, you need to be able to demonstrate that you are aware that other factors affect economy as well as house prices. Evaluative points could include:

  1. Depends on other components of AD. e.g. house prices could rise but if exports and government spending fall, AD may not increase.
  2. Depends on Consumer Confidence
  3. Housing is the biggest form of wealth 75% of population are homeowners. Therefore, changing house prices can have significant effects on the economy.

see: How Housing Market affects the Economy

Micro Questions on Housing Market

  • Micro questions on housing market can focus on
  • Explaining house prices (through supply and demand side factors)
  • Explaining regional differences in house prices
  • Market failure and housing. Is housing a merit good?

Government Intervention and Housing Market

  • Should government intervene in the Housing Market to reduce price volatility?
  • Should government build more houses to overcome housing shortage?
  • Should new houses be built on greenbelt land?

Feel free to ask a question on the Housing Market 

One thought on “Housing Market for AQA Unit 3

  1. # Explaining house prices (through supply and demand side factors)
    # Explaining regional differences in house prices
    # Market failure and housing. Is housing a merit good?
    * Should government intervene in the Housing Market to reduce price volatility?
    * Should government build more houses to overcome housing shortage?
    * Should new houses be built on greenbelt land?

    actually can you give me guidelines for those questions especially evauation parts .thanks a lot. i will buy you a coffee haaaa 🙂

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