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Factors Affecting New Housing Supply These can be summarised as follows: Costs of production for construction companies Employment costs (including wages, overtime payments and employer national insurance contributions etc). Costs of purchasing land for housing development. Costs of purchasing building components and raw materials. Costs associated with achieving planning consent from local authorities. The number of construction companies in the market and their business objectives. The extent to which the construction industry is able to achieve economies of scale in house building and reduce their constructions costs by implementing innovation in building projects. Government taxation and subsidy of new housing developments (e.g. grant aid and other forms of public funding for housing developers building properties for key workers / public sector employees and financial support for other forms of social housing). Rising labour costs push up construction costs One of the features of the housing market in 2005-06 was evidence of a rise in the costs of building new homes. According to building industry sources, the cost of erecting a new home has grown by over forty per cent over the last five years. Labour costs have risen sharply. This reflects the shortage of skilled or semi-skilled construction workers. Many building firms are relying on migrant workers to overcome labour shortages. |