The Supply of Housing
The capital stock adjustment model outlined in Chapter Three shows how changes in the demand for housing lead to changes in the rate of construction of new dwellings. The precise form of this relationship, and indeed the general responsiveness of the supply of housing services to the various demands for them, will depend upon the nature of the construction industry. In this chapter an analysis of this industry is presented. Its aim is to identify those features of the industry which are important in determining the way supply-side factors influence market performance rather than to provide a detailed description of the industry. However, some appreciation of the industry’s organisation and structure is a necessary prerequisite for understanding its performance, and so this is dealt with in the course of the next section. This is followed by an analysis of the cost conditions found in the industry which includes a discussion of the choice of building techniques and forms.
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