Grade Booster exam workshops for 2024. Join us in to Birmingham, Bristol, Leeds, London, Manchester and Newcastle Book now

Teaching activity

In the News Teaching Activity: UK House Prices Are Falling More Rapidly (Sept 2023)

Elizabeth Veal

7th September 2023

House prices have fallen by 5.3% in the year to August according to Nationwide. Have a go at this free teaching activity, which includes a downloadable worksheet and suggested answers.

House prices in the UK are affected by changes in demand and supply for housing. A key reason for the fall in house prices is the impact higher interest rates have on demand. The Bank of England has increased the bank base rate from 0.1% to 5.25% since the end of 2021. Mortgage interest rates have followed a similar upward path.

According to this BBC article, there has been a 25% fall in the number of first-time buyers. The fall in house prices has occurred despite much-discussed shortages in housing in the UK. According to the government’s own statistics, 239,380 new properties were built in 2022-23, an increase of just 3% on the previous year.

House prices see biggest yearly decline since 2009 (BBC News)

Read the article and then answer the following questions.

  1. How do higher interest rates affect the demand for houses?
  2. Draw on a demand and supply diagram to show the effects on the housing market of an increase in interest rates, ceteris paribus.
  3. What other factors influence the demand for houses?
  4. What factors influence the supply of houses?

Download the worksheet and suggested answers

Elizabeth Veal

Liz has taught Economics for over 25 years, including several years as Head of Economics at leading schools.

© 2002-2023 Tutor2u Limited. Company Reg no: 04489574. VAT reg no 816865400.