The British Building and Construction Industry
UK construction industry provides tenth of UK gross domestic product
and employs 1.4 million people. UK designers, civil engineers,
contractors, component and product manufactures. UK construction
industry is one of the strongest in the world with output ranked in
global top ten, with increase of private finances to public sector
projects. British consultants and contractors are well positioned to
offer skills and experience in building projects.
In order for British construction industry to do what they are best
capable of doing which is providing and building new houses, demand
and supply plays a vital role. There has to be to be enough demand for
houses for construction industries to supply and build houses. There
are determinants to supply and demand which affect the construction
industry decision making and future profitability. These can be
divided into determinants of demand and supply.
Determinants of demand Determinants of supply
Income Price of land
Level of economic activity Cost of building material
Level of rents
Expectation of future price increases
Ratio of income to house prices
What also determines future profitability of construction industries
are consumer tastes, social attitudes, disposable income, demographic
factors, political, economical and environmental factors and important
macroeconomic indicators. I have done sufficient research on these
topics and these will be discussed in this report.
The Determinants of Demand For Houses
Price- Price is value of the product. If prices of houses are too high
and consumers are unable to afford them, the demands for houses fall.
Thus supply falls. This gives no demand to construction industries and
they will see a loss in profit and if prices remain high future
profits for construction industries looks bleak, for example,
Constructionline Would not have many housing projects due to lack of
demand for houses.
Price for houses increase, demand for houses falls from d to d1. The
price elasticity for houses is elastic, slight increase of prices
Income- Income what people earn in return of their work commitment. As
peoples incomes rise their demand for most goods rise, such goods are
called normal goods. Privately owned housing is a normal good for most
people. AS average living standards rise, the total demand for housing
expands as does the demand for more expensive properties as people
look to ‘move up the market’. This will increase the work and demand
for constructionline and other building and construction industries as
incomes are greater and people are now willing to buy bigger and new
houses, this will increase long run profits of construction
Incomes rise, demand for houses increases D-D1 followed by an increase
of quantity Q1-Q2 by construction industries as there is...