Houses are assets which are demanded for the flow of services they produce over their lifetime. Thus, the starting point for an analysis of housing is the demand for housing services. These are bought either by buying the asset itself or by renting it. Therefore, the demand for houses to purchase and the demand for rented accommodation are derived demands. Housing gives a diverse bundle of services associated with shelter and comfort, independence and privacy, status and, like all durables, services of a security and investment nature. These services may be bought in various combinations. For example, investment characteristics exist in houses which are owned but not, to the occupier, in those which are rented. Further, each service may be purchased in varying quantities. For example, shelter services vary from the basic necessary for protection from the elements, to ‘luxury’ levels which include central heating, ample room space and the like. Ability to buy housing services in varying combinations and to various degrees implies that housing is a heterogeneous commodity.
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