... a monopoly in the housing market, therefore, there cannot be perfect information and full and free competition. * Externalities - housing both effects the environment and is effected by it. The price in the market system does not reflect the external costs arising from consumption or investment in property. In the figure below the equilibrium point in a perfect market would be where MUsoc = MCsoc but the market without intervention would clear at a price Ppr. Positive Externalities Negative Externalities The fact the that housing is an investment good and a consumption good means that both consumers and suppliers are dependant on the finance market. The housing market is paid for mainly by borrowing, which has to be based on predictions of future value. * Uncertainty - because the future is uncertain so is the housing market. Regulations and intervention are necessary to reduce uncertainty. * Meeting needs - if profit is the only consideration, people ...

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