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Specification:

  •  Demand and supply, Aggregate Demand, Inflation, Subsidies

Click to read the article below and then answer the questions:

Beware the property trap ensnaring young buyers

  • Using the first three paragraphs of the article, explain the wealth effect

  • Using a diagram, explain how the relaxation of affordability limits on mortgages will put upward pressure on house prices

  • What economic arguments would suggest that the £450,000 LISA limit should rise?

  • Use a diagram to explain how the government is “effectively subsidising property developers” in London through the Help to Buy equity loan

David Dike, Economic Research Council — Economic Episodes

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