'Using elementary market analysis, demonstrate the connections between interest rates and house prices. The analysis should be supported by reference to actual market data'
Could someone please give me information on this topic as i am really in need of it!! Would be much appriciated!
The connection between interest rates and the price of real estate is not difficult to understand when you remember the law of supply and demand. Most people must get a mortgage in order to buy a house. When interest rates are low, as they have been over the past several years, more people can buy a home. When more people can buy, demand goes up. When demand goes up, prices go up. So, low interest rates are linked to higher home prices; high interest rates, which make mortgage payments higher, will price some people out of the market, lowering demand -- and thus, the price of a home.
While I don't have a lot of experience with market analysis, I would think that gathering "actual market data" would simply be a matter of deciding which market you want to study (Orange County? New Jersey? the U.S. as a whole?) and finding statistics online which show what has transpired in that area over the time period you are using as an example (the past five years? since the '80s? the 20th century?). If you can use market data from anywhere, try doing a few searches to see what area is easiest to find information on.
I hope this can help you get started!