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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

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Report On 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 Price Price Income Price of land Level of economic activity Cost of building material Consumer confidence Level of rents Interest Rates 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. ...read more.


However if ratio was greater than hose prices consumers would earn more than what is needed to own a house, this would increase demand and supply of houses. Determinants of supply for houses Price- The amount of price suppliers are willing to accept to supply from what is demanded. In this case what construction industries are willing to except to build houses. If price is too low then suppliers will not be willing to supply as they would not make as much profit margin, this will result in constructionline and other construction industries without work and jeopardise their future profitability. Prices too low constructionline and other construction industries would fail to supply for that price which will result in loss of supply from s-s1 which will see a fall in quantity produced from q1-q2. However price remains the same. Equally if prices and profitable for builders, then counstructionline would meet supply with demand which would increase their profits in the short run and long run. Price of land- Price of land is very important, because land is a scarce resource and cannot be produced or created. Therefore the price incurs the most important factor to suppliers. If land is cheap then suppliers will be easily able to purchase and begin constructing houses, however if land is expensive suppliers will find it hard to purchase the land. ...read more.


This also depends on economic factors mentioned above like employment. Those that are unemployed can't obviously be able to purchase house but those with secure job can. Also inflation and interest rates play vital role in determining the demand and supply for houses, high interest rates deter ate people from taking out loan and mortgage, which reduces demand of houses and reduces the demand of construction industries. What ever reduces the demand of houses equally reduces the demand of construction industries. Recommendation- Government intervention could be needed to resolve the problem of falling demand for house. What could be doe is lower interest rates, this would encourage people to take out loans and mortgages and for return pay less in interest. This would increase demand and increase demand for construction industries. Another measure could be to decrease house taxes , this in return will also increase the demand of houses as consumers will have to pay less to keep the house running. Government could also step in and provide subsidies to those who receive less earnings or those that cant find employment, this would also increase the demand for houses and profit for construction industries. All these measures can increase demand and in return supply of houses which will see demand and profits for construction industries increase. This would improve economic growth and stabilise the economy. Sources and Bibliography Websites www.tutor2u.net www.dti.co.uk www.constructionline.co.uk www.economics-revision.co. ...read more.

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