The law of supply and demand is a basic economic principle that explains the relationship between supply and demand for a good or service and how the interaction affects the price of that good or service. The relationship of supply and demand affects the housing market and the price of a house.
A number of factors including government policy affects the law of demand and supply, which I hope my diagram illustrates
When there is a high demand for properties in a particular city or state and a lack of supply of good quality properties, the prices of houses tend to rise. When there is no demand for housing due to a weak economy and an oversupply of properties is available, the prices of houses tend to fall.
