Anyone clued up on Economics?

[Mej]

.

[keith_d]

I'm not an economics geek, but that sounds like a reasonable question, depending on how many words they're expecting.

1) Start with the definition of a perfect market
2) Analyse how each of the attributes of a perfect market applies to the property market
3) Wrap up with a couple of paragraphs highlighting the deficiencies in the property market, with particular reference to assymmetric information, location dividing it into numerous smaller markets with limited competition, and the actions of estate agents acting as market makers.

Hopefully a real economist will come along with some better suggestions.

Keith.

[Mej]

.

I did a degree in economics but that's not a question that's easily answered on a forum as it's an essay question! Do you have access to journals? That's always the best bet as with a subject like that I'm sure someone would have done a thesis / study on it.

Seems like quite a specific subject, have you covered real estate economics before? Have a look for a text on it or failing that applications of perfect markets.

Essentially there's almost no such thing as a perfect market, especially not real estate! Barriers to entry/exit are high with mortgage costs and availability, asset depreciation causing negative equity which is topical. Prices are driven by RICS in the best scenarios and worse over estate agents who benchmark prices on other properties at the time which is subjective, doesn't drive an equilibrium price.

supply in the uk is restricted (due to geography / population) so there's no perfect supply and so prices are naturally inflated. That's just a couple of thoughts and it'll go a lot further than that!

+1 to what sauluk has said.
I am an economics student at the moment and that is pretty much where i would go with this essay question.
Basic definition of both real estate markets and perfect markets. Bring in supply and demand and government policies that will affect the S&D, along with external factors that will help create perfect markets (although they are rarely or never achieved) and the affects on the real estate market.
hope that helps.

Keith's suggestions sound good.

You might also want to consider the impact of the web in terms of achieving perfect information, e.g. the sites which show what houses in a specific road have sold for, and/or how prices have trended from there. Plus the number of operators and the level of profits made.

But whatever you do, don't say that the real estate market is anywhere close to a perfect market! (It's often used as an example of one that isn't)