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Demand and Supply Report - ECON1101 Submission Question...

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ECON1101 Submission Question Report z3284018 Submission Question 3 The cost of housing in Sydney is one of the highest in the world (according to recent report). 1. Use the demand and supply models for the rental housing market to show the impact of the following factors on the market for rental accommodation: a) The increase in immigration to Australia D P D1 S P2 P1 Q The demand for rental housing will increase as there are more immigrates who are in need of renting houses. The demand be shifted to the right from D to D1 and the price of rental housing will go up from P1 to P2 as a result. b) The decrease in the general level of interest rate in Australia P D S D1 P1 P2 Q When there is a decrease in the general level of interest rate in Australia, the interest rate for borrowing money to buy houses will be lower. As a result, people will prefer buy houses instead of renting houses. The demand for rental housing will decrease and shifted to the left from D to D1 and the price for rental housing will fall from P1 to P2.
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