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These Are Essentially The Mechanics Of Affordable Housing. This Definition ...

These are essentially the mechanics of affordable housing. This definition therefore goes to the heart of what the concept means in practical and real terms. However, this definition does not encapsulate how malleable this concept of affordable housing can be when it is viewed from particular standpoints.
The concept of affordable housing is particularly linked with certain social and economic problems, such as social exclusion, poverty and crime (Pacione, 1997; p.7 and Rugg, 1999; p.19). This is also supported through the primary research findings of the writer. An interview with Kate Bond revealed that she was suspicious of the social problems which are associated with affordable housing developments and is reluctant to allow her children to play in these areas (Interview One, 2006; p.1).
Affordable housing can therefore also be interpreted from a purely ethical standpoint, in which case it would refer to the wider problem of housing shortages being linked to problems such as poverty, crime and low wages for certain sectoral groups. In terms of economics (and this will be looked at in more detail in the next section) this ethical perspective it somewhat suspended from the analysis and the problem becomes one which is defined in terms of how certain factors such as supply, demand, resources and money shape the concept of affordability in terms of the housing sector.
These issues of definition are important to an analysis of affordable housing since, if one is to examine the question of who really wants affordable housing, it is imperative to extrapolate the concept in sufficient detail. Therefore, the problem of affordable housing and its theoretical underpinnings and context will be examined alongside a discussion of what the concept essentially means to different people, as the next section, an economic analysis of the problem of affordable housing and who really wants it, will elucidate.
3.1.b Economic Analysis of the Problem
The price of housing in a free-market economy is determined by supply and demand. The supply of houses increases, other things equal, as the price of housing rises. The reason for this is that as the price of housing rises, other things equal, producers will find it profitable to allocate more resources to the production of houses relative to the production of other things they might otherwise produce. However, as the price of housing rises, other things equal, the demand for housing falls. The reason for this is that as the price of housing rises, other things equal, consumers will find it advantageous to substitute away from the consumption of houses towards the consumption of other goods that are now relatively cheaper to purchase. The price of housing, known as the equilibrium price, is the price at which these two forces, demand and supply are equal. This is how economists' typically analyse markets (Landsburg, 2002; ch.1).


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