The Impact of Economic Factors on the Price of 5-Room Resale Flats in Ang Mo Kio
Introduction
The housing market in Ang Mo Kio, Singapore, has been experiencing significant fluctuations in recent times. This essay will examine the impact of economic factors on the price of 5-room resale flats in Ang Mo Kio, specifically focusing on the third and fourth quarters of 2017. By analyzing demand and supply curves, as well as the influence of government measures, we can gain insight into the potential changes in equilibrium price and quantity.
I. Demand and Supply in the Third Quarter of 2017
To understand the market dynamics, let us first examine the demand and supply curves for 5-room resale flats in Ang Mo Kio during the third quarter of 2017.
Demand curve:
The demand curve represents the quantity of 5-room resale flats that potential buyers are willing and able to purchase at different prices.
As the price decreases, the quantity demanded increases, indicating an inverse relationship between price and demand.
Labeling the axes, curves, and equilibrium point, we can observe that at a certain price (equilibrium price), the quantity demanded equals the quantity supplied.
Supply curve:
The supply curve represents the quantity of 5-room resale flats that existing owners are willing to sell at different prices.
As the price increases, the quantity supplied increases, indicating a positive relationship between price and supply.
Equilibrium price and quantity:
The equilibrium price is the price at which the quantity demanded equals the quantity supplied.
The equilibrium quantity is the quantity at which the demand and supply curves intersect.
II. Influence of Economic Factors in the Fourth Quarter of 2017
Based on the information provided, it is expected that economic factors such as a strong economy and an increase in foreign permanent residents will impact the demand for 5-room resale flats in Ang Mo Kio during the fourth quarter of 2017.
Demand curve behavior:
With a strong economy, more individuals will have increased purchasing power, leading to higher demand for housing.
As more foreigners apply to become permanent residents and become eligible to buy HDB resale flats, this will further increase the demand for 5-room flats.
Therefore, we can expect the demand curve to shift to the right, indicating an increase in demand at every price level.
Equilibrium price and quantity:
As demand increases, there will be upward pressure on prices.
The new equilibrium price will be higher than the previous equilibrium price due to increased demand.
The new equilibrium quantity will also be higher, reflecting the increased number of transactions.
III. The Impact of Government Restriction on Singapore Citizens Only
If the government introduces a measure that restricts the purchase of HDB resale flats to Singapore citizens only, this will have a significant impact on both the equilibrium price and equilibrium quantity of 5-room resale flats in Ang Mo Kio.
Impact on equilibrium price and quantity:
By restricting eligibility to Singapore citizens only, the number of potential buyers decreases significantly.
This reduction in demand will lead to a leftward shift in the demand curve.
As a result, there will be a decrease in both equilibrium price and equilibrium quantity.
The new equilibrium price will be lower than before, reflecting the reduced demand from non-citizens.
Similarly, the new equilibrium quantity will also be lower due to the decrease in potential buyers.
By implementing such a measure, the government can effectively control housing prices by reducing demand from non-citizens. However, it is important to note that such restrictions may have social implications and should be implemented with careful consideration.
In conclusion, economic factors such as a strong economy and an increase in foreign permanent residents play a crucial role in shaping the price and quantity dynamics of 5-room resale flats in Ang Mo Kio. By understanding these factors and their impact on demand and supply curves, policymakers can make informed decisions to maintain housing affordability and stability.
