Image is AI generated.
The inquiry question I will be answering is the change in the economy after a change in housing price. In the economy when hosing prices increase there is a wealth effect (1) where consumer spending increases and paying mortgagee decreases because their house increases in value leading to confidence in the consumers finances. Banks are also affected as they tend to lend more money as they see an increase of value to their assets. Another change to the economy after a change in housing prices is if housing prices increase than the burden of mortgages and rent will increase decreasing the amount of money (2) of the population that doesn’t own a house and increasing the amount of money of people who own a house.
The economy is something that is made up of many factors the main ones being the people that interact with the economy.(3) The people control the housing market which affects the economy affecting the people, this means that the consumers are affecting themselves when they influence the housing market.
(4)One positive effect on the economy by a increase of the average cost of houses is that it drives up demand for construction jobs leading to job creation and economic growth. However, if the price decreases this can lead to less construction jobs affecting the economy.
(1)Pettinger, T., & Robinson, E. (2023, February 25). How the housing market affects the economy. Economics Help. https://www.economicshelp.org/blog/21636/housing/how-the-housing-market-affects-the-economy/#:~:text=In%20summary%3A%201%20Rising%20house%20prices%2C%20generally%20encourage,prices%20can%20contribute%20to%20economic%20recession%29%20More%20items
(2)Amadeo, K. (n.d.). consumer spending determinants. The Balance. https://www.thebalancemoney.com/consumer-spending-definition-and-determinants-3305917
(3)AuthorsDuncan MaclennanUniversity of Glasgow View ProfileChris LeishmanUniversity of South Australia View ProfileSatyam GoelUniversity of Liverpool View Profile, Authors, & Duncan MaclennanUniversity of Glasgow View ProfileChris LeishmanUniversity of South Australia View ProfileSatyam GoelUniversity of Liverpool View Profile. (2023, June 26). How does the housing market affect financial and economic stability?. Economics Observatory. https://www.economicsobservatory.com/how-does-the-housing-market-affect-financial-and-economic-stability
(4)How does the housing market affect the economy?. Bank of England. (n.d.-b). https://www.bankofengland.co.uk/explainers/how-does-the-housing-market-affect-the-economy
