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
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. 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
demand falls.
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 owne...
... middle of paper ...
...on 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.uk
Sources
Books
- Dr Phil Drummond- Businees environment
- John Sloman- Economics 5th Edition
Factors creating value in the industry and factors that will most likely input demand in the future.
A recession is where there is temporary economic deterioration which lasts longer than a few months, sometimes years. This can be seen by the employment rate decreasing and the reduction of trade and industry work. This is determined by the Gross Domestic Product (GPD) which is a government statistic which shows the total country’s economy movement. This is measured every 3 months (quarterly) and it is said that if after two consecutive quarters the GPD is down then the country is seen to be in recession. (Kollewe, 2009). The most recent recession in the UK kick-started in 2008, which was seen to be one of the worst recessions the UK has seen since the Great Depression. In July 2008 was when it became increasingly obvious that we was about to enter a recession; the unemployment rate kept rising, the housing industry started to cut thousands of jobs and the whole-sale industry was declining in production. (Allen, 2010)
The quantity of a commodity demanded depends on the price of the commodity, the prices of all other commodities, the incomes of the consumers as well as the consumer’s taste. The quantity of a commodity supplied depends on the price obtainable for the commodity as well the price obtainable for substitute goods, the techniques of production, the cost of labor and other factors of production. It is supply and demand that causes a market to reach equilibrium. If buyers wish to purchase more of a commodity than that of which is available at a given price, then the price will to tend to rise. If they wish to purchase less of a commodity than that of which is available, then the price will tend to drop. Consequently, the price will reach equilibrium at which the quantity demanded is just equal to the quantity supplied.
Price increases in the raw material mean that prices needed to be increased, but customers were still willing to pay for a quality product.
Supply and demand will continue to be affected by numerous factors including population growth and the aging of the nation’s population, overall
· The market is dominated by a few large suppliers rather than a fragmented source of supply,
In economics, particularly microeconomics, demand and supply are defined as, “an economic model of price determination in a market” (Ronald 2010). The price of petrol in Australia is rising, but the demand remains the same, due to the fact that fuel is a necessity. As price rises to higher levels, demand would continue to increase, even if the supply may fall. Singapore is identified as a primary supplier ...
.... Supply and demand are not a constant, but an ever-changing model. As the supply and demand curves changed and shifted, Goodlife adapted prices and quantity to match. This scenario is easily adapted to many different aspects of supply and demand. Prices are constantly changing on the products, services bought every day, and supply and demand drove those prices.
Fletchers started their business in the construction sector in 1909. Timber weatherboard house in Dunedin, New Zealand was their first project and they built it. They remain the leading construction company in New Zealand until 2001. In late 2001, they change their name The Fletcher Building Company on the stock exchange of New Zealand. Their main office is in Penrose, Auckland. They have near 20,000 employees working for them. They are dealing with mainly six different sections of construction work, heavy and light both building products, panels, and laminates distribution in New Zealand; they also distribute construction products in Australia and constructing the new big buildings there.
In building construction and in fire prevention there are organizations that have created a useful system on how to determine what type of building falls under which category. The ICC (International Code Council) and the NFPA (National Fire Protection Association) create these building codes for the safety of firefighters. The two most commonly known standards for building classifications are the NFPA 5000 and also the International Building Code (IBC). The two are very similar, however, they different on sub-categorizing. The International Building Code uses Roman numerals behind the type of construction. In addition to subcategories with letters for each five classes and the amount of fire resistance provided for each building. NFPA uses Roman numerals behind the type of construction. Unlike the IBC, NFPA uses a 3-digit number system behind that to sub categorize the fire hourly rating for the load-bearing walls, for the beams and columns, and for the floor construction. The IBC and NFPA breaks down construction in to five classes, Type I, Type II, Type III, Type IV, and Type V.
... this and their marketing strategy will be key if they are to remain viable, grow and compete in the market.
In the short run, other things being equal, an increase in demand will raise the price and this, in turn, will cause an extension in supply.
market. This is true reason because thinking about marketing and how prices might change our
... Also important is the price of complements, or goods that are used together. When the price of gasoline rises, the demand for cars falls.
Threat of substitutes in market as best quality is not always a priority for some customers as they are price sensitive.