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Demand And Supply Of Housing Essay

4214 words - 17 pages

DEMAND AND SUPPLY FOR HOUSING
The determination of prices in local and regional housing markets is a classic example of microeconomics in action! We are seeing the interaction between buyer and seller with prices being offered and agreed before a final transaction is made. In this section we focus on the demand and supply side factors that determine the value of properties in a market.
Each housing transaction in the UK depends on
a) The price that the seller is willing to agree for their property with the prospective buyer
b) The actual price that the buyer is willing and able to pay.
Buyers place offers for a property that the seller can either accept or reject
A Sellers’ ...view middle of the document...

When demand shifts outwards and supply is inelastic the result is a large rise in market price and a relatively small expansion of the quantity of houses traded. As supply becomes more elastic over time, assuming the conditions of demand remain unchanged, we expect to see downward pressure on prices and a further increase in the equilibrium quantity of houses bought and sold.

A STUDY:
ASSESSING DEMAND & SUPPLY OF LOW INCOME HOUSING
Context
Due to lack of availability/affordability of finance and technical assistance, majority of urban poor in India live in poorly constructed semi-formal housing.
Scope
The study's objective was to assess the demand and supply of self-constructed incremental housing in India for households earning below Rs. 15,000 per month and to evaluate the feasibility of providing technical design assistance.
Methodology
The study analyzed the current state of housing in four different tiered cities (Delhi, Ahmedabad, Jaipur and Dehradun) and developed a typology framework based on three parameters: title/tenure, land-use, and right to sell. The typologies served to further disaggregate the simplistic characterization currently adopted of slum vs. non-slum that does not capture the diversity of locations/neighbourhoods in a city. The research involved interacting with civil society organizations and financing institutions to understand the different legal statuses and rights of low-income/informal neighbourhoods.

Self-construction hovers around 50% across all cities and typologies. Owners in income range Rs. 0-15,000 represent around 40% of the total population of cities.

Technical Assistance
Lack of access, knowledge and consequent implementation of the IS Codes (Indian Standard Codes) and NBC (National Building Code) leads to construction of unsafe structures and poor quality houses.

Study Findings
a) Self-construction is the largest supplier of housing: Even in a planned and developed mega city such as Delhi, over 55% of the housing stock has been built through owner led, incremental/self-construction practices.
b) Self-construction is rampant across all settlement types: The practice is seen largely in informally planned neighbourhoods or low-income areas such as slum-resettlement colonies or unauthorized colonies. However, in tier II and III cities, even residents of formal planned neighbourhoods engaged in self-construction practices.
c) Households earning less than Rs 15,000 a month rent or own housing produced through self-construction: To target this income segment, innovative financing/mortgage models are required to reach the market. The poorer households (earning Rs 5,000 per month) live in cheap private rentals in settlements with the weakest property rights and do not usually invest in home upgrades.
d) Safety requirements would demand technical assistance: The National Housing Bank, under the direction of the National Disaster Management Agency (NDMA), has issued...

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