Discuss: Demand for Smaller Homes on the Rise as Buyers Become Price-Sensitive

In: Other Topics

Submitted By carolyntan
Words 1226
Pages 5
SUMMARY AND ANALYSIS OF ARTICLE CHOSEN.

The article that I have chosen was reported by Channel News Asia on 20th March 2014. It relates to the concept on demand and supply for housing units in Singapore and argued that the developers should build more smaller housing units in order to meet the growing demand for them as buyers are becoming more price sensitive.

The article reports that caveats lodged with the Urban Redevelopment Authority and analysis provided by REMS Advisor, (one of Singapore’s advisory firms) indicated that 48% of total housing sales were from the sale of units below 800 square feet. This figure had jumped significantly from 31% in 2010 and 43% in 2012.

An example used to affirm the shift in demand to smaller housing is the recent sales of UOL’s 555-unit Riverbank @ Fernvale in Sengkang. Despite a 40% of its units sold in over a month since its launch, it is the smaller units that were of highest demand as all of its one- and two-bedroom units were sold completely.

The article also cites that the introduction of the new Total Debt Servicing Ratio framework that took effect from 29 June 2013 has led buyers to become more cautious about purchasing larger units which comes with higher price premiums. This new framework introduced by the Monetary Authority of Singapore has increased the requirements for housing loans and tightened the cap granted to individuals. Financial institutions will now have to consider other factors before granting loan to its borrowers and borrowers will need to declare and provide documentations on their other debt obligation before their loan application can be considered. Given that housing in Singapore are serviced through loans, many borrowers who could have qualified for larger loans previously, now may no longer be able to purchase larger housing as they do not meet the new requirements. This will thus…...

Similar Documents

Discuss Wether Price Is the Main Factor Affecting Demand of a Consumer Product

...Discuss whether price is the main factor affecting the demand for Pepsi The question is telling us to discuss the whether price is the main factor which would affect the demand (the quantity of Pepsi consumers are willing to buy each month or so) for the product in this case Pepsi, this basically means to analyse the alternate factors (non price) which would also alter the demand for the product for example: price of substitute, the quality of substitute, the number of substitute, the quality, the customers income, trend of the time and also factors such as the price of the complement (a product bought with my product i.e. an association). Which in this case would be a complementary food item, like a chocolate bar or sandwich, as Pepsi may be part of a meal deal involving these category of items. The factors which will affect the demand can most generally be categorised into two groups ‘price’ and ‘non-price’ factors, and can most simply be categorised into having two affects on demand these being a direct affect (if this goes up or down the demand will move in sync) which are always non-price as price is an inverse factor which means if it rises or falls the demand will move in the opposite direction. In sum an increase in demand is caused by either an increase in a direct factor, examples: quality, income, advertising and price of substitutes, and a decrease in an inverse factor, examples: quality of substitute, price of complements. And a decrease is caused by......

Words: 1591 - Pages: 7

Resale Private Flat Prices Up; Bigger Homes in Demand.

...---3 3.1 Demand and Supply Concepts---------------------------------------------------3 3.2 Fiscal Policy---------------------------------------------------------------------------4 3.3 Monetary Policy ----------------------------------------------------------------------4 3.4 GDP -------------------------------------------------------------------------------------5 4. Conclusion----------------------------------------------------------------------------------------6 1. Summary of the article Resale private flat prices up; bigger homes in demand. Prices of resale private flats rose 1 per cent last month, fuelled by demand for suburban apartments, according to flash figures from the Singapore Residential Prices Index (SRPI) yesterday. Resale prices of suburban homes climbed 1 per cent in October, the same increase recorded in September. Apartment prices in the central region rose 0.9 per cent last month, following growth of 1 per cent in September. Shoebox flats – those less than 500 sq ft – were up 0.6 per cent last month compared with September’s 2 per cent prices increase. Property analysts said bigger homes dominate the resale market. Shoebox homes make up a smaller percentage of the overall resale market as they are relatively new property category. Experts added that the higher prices for new home mean that more buyers are looking at resale properties as a more viable option. These factors suggest that the price slowdown for shoebox homes is to be......

Words: 1309 - Pages: 6

The Evolution of House Price in the Uk and the Factors That Affect the Demand and Supply of Houses

...evolution of house price in the UK and the factors affecting 3 supply and demand 3. The price and income elasticity of housing demand 9 4. Literature 11 1. Introduction The aim of this study is to explain the changes in the prices of houses by shedding light on factors affecting the demand and supply of houses in the UK. Firstly, we will look at the evolution of house prices in the UK since 2006 and examine relations between house prices and output, employment and mortgage interest rate. Also, supply of houses will be discussed by noting changes in the number of new houses and factors such as land cost, building cost. Then, in the next section we will proceed to examine the factors affecting the sizes of different elasticity of demand 2. The evolution of house price in the UK and the factors affecting supply and demand Over the last four decades, the UK housing market has been subject to boom/bust cycles and Stephens (2011) indicates that UK has one of the most persistently volatile markets in the world. Especially, since 1997 there has been a record growth in UK house prices. The above chart indicates that there are significant fluctuations the in UK housing market. House prices experienced steady growth during both 2006 and 2007 and reached their peak in late 2007. As the end of the 2008, the average house prices had fallen by around 15% (Osborne, 2008). In 2009 prices......

Words: 1826 - Pages: 8

Prices of Daily Essentials Rise

...Fig 1: Comparison of Prices of Daily Essential Commodity Fig 1: Comparison of Prices of Daily Essential Commodity Nepal’s economic future inevitably depends upon the growth of its agricultural sector. Out of 26.4 million populations, nearly 80% of population is employed directly or indirectly in this field. Despite such a large population working in this field there has been food deficit which resulted into turning out Nepal a net importer from exporter, a big irony for a country like Nepal. We should put all our efforts to increase its supply by enhancing the productivity of the essential goods thus lowering our dependency on imports which accounts to 70% of our imports. Besides increasing the supply it’s equally important to try to bring the stability in its market price. Citizens have been forced to pay higher price either in the name of low supply, increase of price in our neighboring country, or due to the cartelling and price collusion by few suppliers. Upward trend of price rise of these daily essential goods, has led several economists to apply their theories attempting to explain the pricing behavior in essential goods market. As shown in figure above we can see the price comparison of present market value with market price a month ago. Different facts have been put forward by different groups showing their own reason and limitations behind the rise of price. * Commodities prices are controlled by whole sellers and big supplier oligopolist: There is a......

Words: 1114 - Pages: 5

Supply and Demand and Price Elasticity Paper

...Supply and Demand and Price Elasticity Paper Betty Hargrove ECO/212 January 30, 2013 Vivek Singhal Introduction After careful evaluation of our daily commodities we have chosen, soap, oil, sugar, salt, tissue, flour, toothpaste, deodorant, electricity, and wheat. These lists of commodities are necessary in a basic style of life. Our chosen product to focus on throughout our paper is sugar. We will address the supply and demand shift of sugar in a market economy. Furthermore, we will address supply and demand and price elasticity as well as whether our chosen commodity is a necessity or a luxury. Supply and Demand Shift There are limited explanations of why the demand and shifts in sugar vary. One of these reasons is because of the federal tariffs that are put on sugar. A tariff or tax on the import or even export increases the price and make it less in demand. No one wants to pay more for anything that we were paying less for a week ago. Also now there are a few different substitutes of sugar then using the real things. There are brands such as Equal, Splenda, and Sweet and Low. These are known as artificial sugar substitutes. These artificial sugar substitutes are sometimes found in food that we consume daily depending on our likes. Items that are, labeled as “diet” or “sugar free” use artificial sweeteners. There is “sugar free gum” and “diet soda”. These products typically have artificial sweeteners. The demand for the sugar is how much the consumers are......

Words: 2096 - Pages: 9

Price of a Cup of Tea to Rise as Demand Soars

...Price of a cup of tea to rise as demand soars Student: Elie Gharib Student Number: 16443365 Lecturer: Dr. Neil Perry Economics 200425 Due Date: 25th October 2013. Drinking tea is much more than a habit but a cultural tradition that dates back for centuries. Second only to water, tea is the most consumed drink in the world. People enjoy a cup of tea especially in the winter season due to the many nutritional benefits it offers Tea is consumed by drying the plants’ leaves and boiling it in water. This is then drunk as black, green or white with milk. Demand for tea is increasing every year; in the last decade, global demand for tea has increased by 40% in comparison to coffee which has only increased by 7% (Aoyama & Akiyama, 2013). The global market for tea is very aggressive especially in countries where the demand is huge; the United Kingdom for instance is considered to be one of the biggest importers of tea as its population consumes around 165 million cups a day (UK Tea Council). This statistic for the UK population might change as prices of a cup of tea (at the retail level) is increasing due to many factors (Price of a cup of Tea to rise as demand soars, 2011). Supply and demand for a product play a major role in indicating the price; however, there are other determinants that also contribute towards the pricing of a product (Nellis & Parker, 2006). As a result the UK market will witness......

Words: 1561 - Pages: 7

Elasticity of Demand, Cross Price Elasticity and Income Elasticity

...A. 1. Elasticity of demand: According to McConnell, Elasticity of demand is the degree to which changes in prices and incomes affect the supply and demand,” (p 76). In other words elasticity tells us how much a price change effects sales or demand of a product. Elasticity can be measured and referred to as: elastic, unit elastic or inelastic. Elasticity of demand is measured: Ed=percentage change in quantity demanded of productpercentage change in price of product If the result is a coefficient greater than one the product price is elastic, if the result is equal to one it is considered unit elastic, and if the coefficient is less than one it is inelastic. 2. Cross-price elasticity: Cross-price elasticity refers to the elasticity of a product when there is a substitute, or compliment product to be considered. According to McConnell, (2012) “The cross elasticity of demand measures how sensitive consumer purchases of one product (say, X) are to a change in the price of some other product (say, Y). “ A substitute product is a product that can be used in place of the original product, at the consumer’s discretion. A compliment is a separate product that is generally purchased to be used with the original product, like peanut butter and jelly. E xy =percentage change in quantity demanded of product xpercentage change in price of product y If the coefficient results are more than zero, the product is considered a substitute product. If the......

Words: 1872 - Pages: 8

Price Elasticity of Demand of Sugar

...Table of Content | Content | Page | | Table of Content | | 1.0 | Introduction……………………………………………………............................. | 1 | 2.0 | Price Elasticity of Demand for Sugar2.1 Availability of Close Substitutes……………………………………………….2.2 Length of Time Involved…...…………………………………………….........2.3 Necessities versus luxuries……………………………………………………..2.4 Definition of market……………………………………………………….......2.5 Share of sugar in the consumers’ budget…………………………………....... | 2 – 345 – 67 – 89 – 10 | 3.0 | Conclusion……………………………………………………………………….... | 11 | 4.0 | Bibliography……………………………………………………………………..... | 12 | | Appendix…………………………………………………………………............... | 13 | Table of Figures Figure | Page | Figure 1: Availability of close substitutes for sugar…………………………………. | 3 | Figure 2: Differences of long run and short run for price hike in sugar…………….. | 4 | Figure 3: Differences between necessity goods (sugar) and luxury goods (honey)…. | 6 | Figure 4: Differences between narrow market and broad market……………………. | 8 | Figure 5: Differences between middle-income and low-income consumers with high-income consumers……………………………………………………………… | 10 | 1.0 Introduction According to the article that was chosen, the Price Elasticity of Demand for Sugar in Malaysia is focused. The group members interpreted and analysed the article based on the core microeconomic concept of Elasticity. The analysed article is attached in the Appendix. The article is mainly regarding the......

Words: 1885 - Pages: 8

Buyer Beware - Poisons in the Home

...Walk into virtually any home in the United States and it is practically guaranteed that there will be a container of some form of pesticide (Raid) or herbicide (Roundup, Spectracide, Ortho) on hand. These are considered “everyday” products used by most homeowners to kill bugs and weeds. They have all been approved by the Environmental Protection Agency (EPA) as safe for use by the general public. They are sold by large retailers as well as smaller local vendors. Based on those two factors, it is a common – but dangerous - assumption that these chemicals must be safe for use. But – “Buyer Beware!” Household pesticides and herbicides contain hidden ingredients that are not provided on the product labels. Under the current laws, manufacturers do not have to divulge all of the ingredients that are used in the production of a pesticide or herbicide. Many of these unidentified ingredients are poisons that could be potentially hazardous to adults and children alike. It is crucial that the labels on these products contain a complete list of the ingredients, as well as any potential hazards. Consumers have a right to this information in order to be able to make informed decisions. There are two categories of ingredients listed on the labels of these products – active and inert. The active ingredients in these products are regulated by the EPA. Active ingredients are those that directly affect the target pest. They must be listed on each container. Problem solved –......

Words: 1563 - Pages: 7

Ped Price Elasticity for Demands

...QUESTION: price elasticity of demand for textbooks is two and the price of the textbook is increased by 10%. By how much does the quantity demand fall? Inter the result and discuss reasons for the fall in the quantity demand. Price elasticity of demand (PED) is defined as the responsiveness of the quantity demanded of a good or service to a change in its price. Price Elasticity of Demand Percentage Change in Quantity Demand Percentage Change in Price for Product A So, Percentage Change in Quantity Demand for Product A = PED X Percentage Change in Price for Product A Given PED of Books= 2, Percentage Change in Price for Books = 10% So, Percentage Change in Demand for Books = 2 X 10% = 20% Therefore the fall in the Quantity Demand of the Books will be 20% Price elasticity of demand Therefore, it is percentage change in quantity demanded by the percentage change in price of the same goods. In economics and business studies, the price elasticity of demand is a measure of the sensitivity of quantity demanded to changes in price. It is measured as elasticity, which it measures the relationship as the ratio of percentage changes between quantities demanded of a good and changes in its price. In other words, demand for a product can be said to be very inelastic if consumers are insensitive to the price and is willing to pay for the product at any price, and very elastic is when consumers are more price sensitive and will only pay a certain......

Words: 676 - Pages: 3

Explain the Concept of Price Elasticity of Demand and Discuss Its Relevance for Business and Government

...the concept of Price Elasticity of Demand and discuss its relevance for Business and Government Price elasticity of demand According to the law of demand: the lower the price the more product is bought. But consumer response to changes in price can vary significantly from product to product. Economists measure the response (sensitivity) of consumers to changes in product prices, using the concept of price elasticity.The gist of the concept of price elasticity is:• if small changes in price leading to significant changes in the quantity bought products, demand for such products are commonly called elastic;• if a substantial change in price leads to only a small change in the amount of purchases, In these cases the demand is inelastic.The extent price elasticity or inelasticity of demand is measured by economists with Ed coefficient calculated by the following formula: The same formula can be written as: Proceeding from the formula, the demand is elastic, if the percentage change in price leads to a greater percentage change in the amount of products that is asked. For example, if a price reduction of 2% causes an increase in demand of 4%, demand is elastic. When demand is elastic, the elasticity is greater than unity. If the percentage change in price is accompanied by a relatively smaller change in the number of products that is asked, then demand is inelastic. If the price reduction of 3% resulting in a growing number of products Asked by just 1%, demand is......

Words: 1809 - Pages: 8

Price Elasticity of Demand

...Price elasticity of demand From Wikipedia, the free encyclopedia Price elasticity of demand (PED or Ed) is a measure used in economics to show the responsiveness, or elasticity, of the quantity demanded of a good or service to a change in its price. More precisely, it gives the percentage change in quantity demanded in response to a one percent change in price (holding constant all the other determinants of demand, such as income). It was devised by Alfred Marshall. Price elasticities are almost always negative, although analysts tend to ignore the sign even though this can lead to ambiguity. Only goods which do not conform to the law of demand, such as Veblen and Giffen goods, have a positive PED. In general, the demand for a good is said to be inelastic (or relatively inelastic) when the PED is less than one (in absolute value): that is, changes in price have a relatively small effect on the quantity of the good demanded. The demand for a good is said to be elastic (or relatively elastic) when its PED is greater than one (in absolute value): that is, changes in price have a relatively large effect on the quantity of a good demanded. Revenue is maximised when price is set so that the PED is exactly one. The PED of a good can also be used to predict the incidence (or "burden") of a tax on that good. Various research methods are used to determine price elasticity, including test markets, analysis of historical sales data and conjoint analysis. Contents [hide]  * 1......

Words: 3410 - Pages: 14

Price Elasticity of Demand

...situations, business managers raise or lower price as they judge in their best interest. Elasticity of demand is a quantitative way to measure consumers’ sensitivity or responsiveness to price changes. Starting from the current price a firm charge, elasticity of demand is measured by the percentage change in quantity demanded in response to a percentage change in price. If, for example, price is raised by 10 percent and quantity demanded decreases by 10 percent (the law of demand states the higher the price the lower the quantity demanded and vice versa), the increase in revenue from the higher price is exactly offset by the decrease in quantity demanded. Total revenue for the firm will remain the same, though profits may increase because the firm is now selling less quantity of their product and receiving the same amount of revenue. When a price change results in no change in total revenue, the elasticity-of-demand coefficient is one or unitary.  The role of price change influences to a greater extent in the demand for these substitutes and compliments. This suggests that the elasticity of demand also is significant when considering compliments and substitutes that also play a role in the market trends. According to the (Travel Agents: Executive Summary-UK-December 2011) initially all the travel agency kept their prices constant and carried on as if nothing has happened. The report emphasizes on the decline of overseas holiday booked since the price of the holidays didn’t......

Words: 1597 - Pages: 7

Price Rise

...Price rise is a world phenomenon today and inflation is affecting every section (rich and poor) of society. About three decades ago we could purchase wheat at thirty rupees a quintal, but today we cannot get it at less than three hundred rupees a quintal in big cities. Everything was within the reach of man until a few years ago. Today there is no limit to the price rise of all kinds of items. Millions of people in the world have to go hungry. They have to work hard to make both ends meet. In the pre-independence days, a clerk got only Rs. 60 per month, but now he gets about a ten thousand. Pays have gone higher, but the employs are not satisfied. They have large families to maintain and it becomes difficult to feed so many mouths with hardly any money. There is a dearth of cheap accommodation and there are many people living in slums. The prices of clothes are also high and often some people don't even have any money to buy these to cover themselves with. The government goes about imposing taxes after taxes on the citizens. This leads to a lot of money going into the national expenditure and into the pockets of corrupt leaders and the officials. Black marketing is another result of these heavy taxes and people begin to conceal their actual income. The government should impose taxes on hoarders and rich people. Production of agricultural goods should be increased along with industrial goods. Their prices should be fixed. The government should undertake a big scheme of......

Words: 420 - Pages: 2

^ ^ Price Elasticity of Demand ^ ^

...Price Elasticity of Demand |   | In this chapter we look at the idea of elasticity of demand, in other words, how sensitive is the demand for a product to a change in the product’s own price. You will find that elasticity of demand is perhaps one of the most important concepts to understand in your AS economics courseDefining elasticity of demandPed measures the responsiveness of demand for a product following a change in its own price. The formula for calculating the co-efficient of elasticity of demand is:“Percentage change in quantity demanded divided by the percentage change in price”Since changes in price and quantity nearly always move in opposite directions, economists usually do not bother to put in the minus sign. We are concerned with the co-efficient of elasticity of demand.Understanding values for price elasticity of demand * If Ped = 0 then demand is said to be perfectly inelastic. This means that demand does not change at all when the price changes – the demand curve will be vertical * If Ped is between 0 and 1 (i.e. the percentage change in demand from A to B is smaller than the percentage change in price), then demand is inelastic. Producers know that the change in demand will be proportionately smaller than the percentage change in price * If Ped = 1 (i.e. the percentage change in demand is exactly the same as the percentage change in price), then demand is said to unit elastic. A 15% rise in price would lead to a 15% contraction in demand leaving......

Words: 2787 - Pages: 12