According to the article, housing sales gone up in the past month. The increase in mortgage return may cause the demand of housing to fall. Housing sale did decrease in the past months, but there is a tendency that it will increase. Housing is a need for people, so the demand for it is inelastic. As the price of housing increases, the firms will likely to have an increase in sale over time.
Under this economic environment, it is likely that some company may try to decrease their price. However, the most important action for housing companies now may not be decreasing the price, but keeping the demand for their housing stable by non-price competition. Companies should use advertisement to specialize their housing. Even though all the housing companies has increased their price due to market force, companies can convince the customers that their housing has kept the price as low as possible. Also they can aim for high income customer group by making their housing appears to be with higher standard.
In an unstable economic environment, companies should set a suitable strategy and try to make themselves a place in the market.
Reference: http://www.ctvnews.ca/business/new-mortgage-rules-cooling-home-sales-canada-wide-report-1.969134
Trackbacks