ABSTRACT
As suggested in Chapter 2, the concepts of demand and supply are the basic building blocks of economics. In this chapter we focus speciÀcally on demand, and in the next chapter we deal with supply.
When economists speak of demand they refer to effective demand. Effective demand is money-backed desire. It does not refer to the demands of a spoilt child wanting everything it sees. Demand analysis focuses on how much is being spent on speciÀc items and how that demand may alter if its price changed. Demand from an economist’s point of view is ‘genuine’ demand backed by the ability to make a purchase. It is distinct from need. As a consequence, the total number of households needing accommodation often exceeds the total number of homes in the housing market. Only those who have sufÀcient means to ‘demand’ accommodation – that is, can afford to buy or rent at market prices – can be conÀdent of securing somewhere to live. This anomaly introduces the problem of affordability that is faced by the 5 million living in social housing and the 100,000 homeless people that were estimated to be living in temporary accommodation or sleeping rough in the UK at the start of 2018.
