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
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
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
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
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