Thereare four major factors of production that can affect a construction industry.They are land, labor, capital and entrepreneur.
In construction industry demandwill depend on the many markets like housing, property and real estate andinfrastructure. Land is a factor of production which consume by firms and it isa fixed factor of production. The key factor that is affecting the price ofland is ‘Tax’. Rent is the income of a land. Labor is one of most significantfactor of production and wages are the income of labors. Demand for labors areaffected by some factors like structure of a firm, change in technology, changein the demand for firm’s product and more. The demand for labor by company isderived demand.
Capital is also consume by firms. Income of capital is interestand it is what business and companies pay to the people those who supplycapital. Supply and demand determined the interest. Furthermore, entrepreneuris also consumed by firms and get profit as an income. Considering about thehousing market, due to changes in above factors housing market reduces orincreases.
For an instance it the government changed their policies and reduceloan interest. Hence many people tend to get loans and construct houses. Bygetting loans people’s capital are increased. The demand for infrastructureas a major segment in construction sector changes according to the variationsin factor market. As an instance, land is an essential factor to buildinfrastructure facilities. Rent of land can be changed accordingly to landowner’s decisions.
So that will directly effect on infrastructure sector. Real estate and property is a majorsegment in construction which always varies according to factor market changes.Real estate owners buy lands and build houses in them. It is the responsibilityof owners to pay laborers working on land.
If the wages are not supplied asagreed demand for real estate will have to face changes. This report includes theanalysis of demand and supply in construction sector due to changes in factormarket.