Demand and Housing Supply

TOPIC: It is generally argued that demand for housing among the poor is given (is always there) but the problem is supply. Discuss this assertion and establish the extent to which demand and supply factors affect housing provision.
DATE: 27 AUGUST 2010

Demand for housing among the poor is given but the problem is supply. Around the world there is a problem of housing affordability crisis. The existence of poor people who cannot afford housing is a major social problem which cannot be denied. This essay will look at the factors affecting housing market in terms of supply and demand. Land for housing is a package of services, when providing land for housing there must be infrastructure. Housing sponsors have confused the role of housing prices with the role of poverty. The government lead organization of providing social housing is not making enough numbers to meet the demand. Complains from builders is that there is no feasible land to carry on with building houses. Financial institutions that used to provide finance have lost together with banks because they made risk assessments and the house building has been hit badly. Kivell argues that there are three features that need to be considered when looking at the supply factors affecting housing production. Demand for housing continues to grow rapidly. In relation to migration to urban areas, which is urbanisation the increase in the number of people migrating to urban areas also increases the demand for housing provision.
Supply factors
Land for housing is a package of services, when providing land for housing there must be infrastructure: water, roads, sewer and electricity. “Investment in urban housing involves purchase of land, construction of dwellings, and the provision of associated physical and social services” (Grimes 56 1976). This then brings in the cost of land, because all these...