OXFORD CAMBRIDGE AND
RSA 2024
GCEEconomicsH460/01: MicroeconomicsA Level
OCR 2024
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, Oxford Cambridge and RSA
Wednesday 15 May 2024 – Morning
A Level Economics
H460/01 Microeconomics
Time allowed: 2 hours
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• a scientific or graphical calculator
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INSTRUCTIONS
• Use black ink. You can use an HB pencil, but only for graphs and diagrams.
• Write your answer to each question in the space provided. If you need extra space use the lined
pages at the end of this booklet. The question numbers must be clearly shown.
• Answer all the questions in Section A, one question in Section B and one question in Section
C.
INFORMATION
• The total mark for this paper is 80.
• The marks for each question are shown in brackets [ ].
• Quality of extended response will be assessed in questions marked with an asterisk (*).
• This document has 20 pages.
ADVICE
• Read each question carefully before you start your answer.
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, 2
Section A
Read the stimulus material and answer all the parts of Question 1.
Is the UK housing market in crisis?
Between August 2020 and August 2021, average house prices in the UK rose from £239 000 to £280
825. 2021 was a record year for house sales in the UK. Very high demand continued, with many in the
market saying that there is considerable shortage in supply. This prompted predictions that prices
would continue to rise as they had since the start of 2020. (see Fig. 1).
100
Feb Aug Feb Aug Feb Aug Feb Aug Feb Aug Feb Aug Feb Aug
2015 2015 2016 2016 2017 2017 2018 2018 2019 2019 2020 2020 2021 2021
Partly due to competitive supply, trends in the market for houses also affected those wanting to 5
rent properties. Record demand in 2021 for rental properties outside of London forced average rental
prices up by 4.2%. At the same time, average rents in London fell by 7.8% in a year.
Converting empty shops into homes has been proposed as one way to increase the supply of housing
and tackle the shortage of housing in the UK. A change to legislation in 2021 means
that planning permission is no longer required to convert commercial buildings, such as shops, 10
restaurants and gyms, into homes. However, critics highlight research which suggests that 89% of
commercial buildings in the London Borough of Barnet could be lost due to the new legislation.
, 3
One private sector retailer taking advantage of changes in the law is John Lewis plc. During 2020 and
2021, John Lewis plc announced the permanent closure of 16 of its 50 UK department
stores. In July 2021 it announced plans to convert some of its closed stores to create 100 000 15
new homes.
The City of London Corporation is the public sector organisation responsible for managing the historic
centre of London, known as ‘The Square Mile’. It is responding to housing shortages by planning to convert
empty office space into 1500 homes.
Regulations mean that all new homes must be of a high quality and meet legal space standards 20
and building regulations. However, concerns have been raised about many new developments. Some
politicians have complained that while more homes are needed, the necessary infrastructure (such as
roads, schools, and doctors) will not follow.
There are also worries about the concentration of power in the housebuilding industry (see Fig. 2).
In 2019, four of the UK’s largest housebuilders – Barratt, Countryside, Persimmon and 25
Taylor Wimpey had a relatively large market share. Some economists and politicians suggested these
companies were acting as a cartel, deliberately slowing down construction and controlling competition.
According to the House of Lords’ Economic Affairs Select Committee, “The UK’s big developers *housebuilders+
have become far too powerful with the result that profit margins can be as high 30
as 30%.” Instead of competing on quality and price, each housebuilder focuses on separate geographical
locations giving potential house buyers little choice. As smaller housebuilding firms continue to go out of
business, six of the largest housebuilders own more than one million sites ready for new building.
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