Using a demand and supply diagram, comment on the likely impact on the market for new houses of relaxing planning regulations? (6)
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The relaxing of planning regulations would mean that it would be easier to develop and build new houses due fewer constraints on developers. (1st mark application)
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This would therefore mean that the supply of houses would increase as the regulations decrease, causing a shift to the right in the supply curve. (2nd mark application)
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The Supply/ Demand equilibrium would therefore also shift to the right, causing a new market equilibrium. (3rd mark application)
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This would therefore cause an increase in quantity of housing while reducing the price of housing. (4th mark analysis)
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However, the effect of the price decrease would depend on the current elasticity of demand in the housing market. (5th mark evaluation)
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This is all under the assumption that other factors in the housing market remain constant. (6th mark evaluation)
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