Figures today show that asking prices for houses have lowered for the second month in a row. This is explained quite simply by our demand and supply diagram. The supply of houses has shifted to the right in recent months as home owners become a little more confident. Along side this demand has shifted to the left.
The shift to the left in demand has been partly caused by people taking summer holidays and therefore not looking for houses over this period. It would be a good activity for students to draw the demand and supply diagram for the housing market showing the changes and explain what has happened to the quantity sold and price.
Property website Rightmove found sellers slashed prices by 1.7 per cent during the month to August 7, sending the average asking value down by £4,091 to £232,241.
Home owners now need to wait to see whether this drop in asking prices is simply the usual summer slow period or something more. With recent news reports suggesting a possible double dip the problems in the housing market may well continue.
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