Question

1. discuss 3 plausible factors leading to the double digit growth in house prices between years 2011 to 2013 (max 450 words).
2. discuss the 2 strategies implemented by the government in 2012 to curb excess house price growth (max 300 words)

Answer 1

House prices have increased tremendously between Years 2011 to 2013. The major factors are as :

• Rise in the demand of Houses : Demand of houses have increased to a very large scale in the year. People had high inclination towards building houses as the economy was booming.
• Population growth : There was a tremendous growth in the population from the year 2011 to 2013, leading to a consequent rise in the demand of Houses.
• Lower rate of interest on Home Loans : Banks have come with attractive Home Loan offers where the Home Loans are available at a cheaper rates leading to many potential customers going for Home Loans and purchasing Houses. As a result the price of houses have increased.

Government has come up with various policies in 2012 to curb excess house price growth. These are as :

• Putting an upper cap on House prices : Government has put an upper cap on House prices in order to control the excessive growth in the price of houses.
• Increase in interest rate of Home Loans : Government has increased the interest rate on Home Loans in order to bring down the demand of Houses and thus the price of houses also came down.