Role of the Market
Performs same functions as all other markets; it 'allocates resources'
Behaviour changes in supply ie change in a 'factor price or technological advance' will not significantly affect demand. Behaviour changes in demand ie 'Shift from owner occupier to rental' supply is slow to respond.
will still have the effect of shifting the supply curve which in turn creates excess supply or demand inducing a behavoiur change which happens by the way of price signals.
Turnover of existing stocks dominates supply and is not sensitive to price or proift signals, there are other motivations in property
Land values are predominately driven by demand, rent and capital prices rise and supply responses are too weak to bring prices back down.
The benefits(utility, productivity, return) are allocated but not perfectly.
Allocative efficiency & (equity) - evaluative crit
Deviation from Adam Smith's theoretical benchmark - the property market deviates in all areas which suggests inefficiency in the allocation of resources
The 4 main sources of allocative inefficiency: (market failure) provide with diagrams if possible and property market examples
Monopolistic power fig 5 paper 0550 restriction of supply by a monopolistic owner. someone standing in the way of development by asking extertionate money
Govt. Intervention - ill conceived government involvment
Imperfect Information - a decision made where agents have distorted advice to gain comission, public infrastructure plans are unknown as are competitor plans. can be improved by central records repository better infored surveyors less secrecy
Exteralities welfare loss and gain external costs and plot densities fig 2 0550