Questions on house prices

Question 1

With the help of a diagram:

1. Explain the likely circumstances in which house prices might fall
2. Analyse the likely impact of this fall on:

Property owners

First time buyers

Those living in rented accommodation

The rest of the economy

Question 2

House prices
Consider the information contained in the demand and supply schedule for new-build houses, and answer the questions that follow.

HOUSE PRICES £000	DEMAND (000)	SUPPLY (000)
500	1000	2400
450	1250	2300
400	1500	2200
350	1750	2100
300	2000	2000
250	2250	1900
200	2500	1800
150	2750	1700
100	3000	1600

1. What is the current equilibrium price of houses?
2. What would be the likely effect of the government imposing a maximum price of £200,000?
3. What is the likely effect on house prices of a fall in interest rates, which increases demand by 10% at each price?