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Price Elasticity Of Housing Demand

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Price Elasticity Of Housing Demand
Price elasticity of housing demand in the long term.
Home construction process is time consuming, therefore houses are not changeable in the short run. It takes plenty of time to build new buildings, and existing buildings are very costly to demolish, therefore, price elasticity of demand is measured at long term. For most households, a house is the largest single asset as well, housing is regarded as a necessity that is critical to for people to meet enduring basic needs. The price elasticity of demand measures how much the quantity demanded in response to a change in price, price elasticity of demand for housing is inelastic, there will be only a relatively small decrease in housing demand in response of the change of its price. The price elasticity of demand is determined by the availability of substitutes, there are few close substitutes available, demand for houses is more likely to be inelastic.

The price elasticity of land supply …show more content…
The law of demand is a standard economic principle that explains the relationship between supply and demand for a good or service and how the interaction affects the price of that good or service, the current Australia high housing prices always reflect the intersection of strong demand and finite supply. In the mid 2000s, housing shortage is existing when the demand for houses demand exceeds houses supply in the
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