Record numbers of visitors to the Olympic Games want accomodation in the host city. Explain the effects that this will have on the market for rental properties.

Before starting, it is important to note that the property market is different to other markets as building new houses/flats takes time, so the supply of accomodation cannot be increased quickly. Therefore, the supply of rental properties is relatively inelastic - this should be reflected in the diagram as the supply curve should be relatively steep.The increased number of visitors to the city is a non-price demand factor, which increases the quantity demanded for rental properties ar all price levels, with supply remaining the same. This leads to an outward shift in the deman curve. This forces the equilibrium price to increase and the equilibrium quantity will also increase. Thus, more properties will be rented at a higher price. As the supply curve is inelastic/steep, the proportional increase in price is greater than the proprtional increase in quantity (as can be shown in a diagram).