The Economics of Speculative Construction Development Term Paper

The Economics of Speculative Construction Development - Term Paper Example The housing sector in 2010 had recorded sales of 276,000 houses in the urban and semi-urban areas. This figure in last few years has increased to approximately 454,000 (Athey, 2009). Although the housing sector has been earning steady revenues, the required rate of growth has not been satisfactory. Common people are finding it risky to invest in property by acquiring loans due to the consistent rise of interests. Post financial crisis, most of the financial institutions have established stringent policies in respect of providing housing loans. The housing sector of the U.K. however plays a major role in the development of the economy as a whole. Even though the sector has been incurring slow growths, the revenue obtained from the housing and development sector is seen to be persistently high. The demands for houses have remained high as the economy is quite prosperous. Individual in the U.K have a high level of disposable income, due to which they find it feasible to invest in proper ty (Berry and McGreal, 2003). Research and studies in this sector have indicated that the demand for houses is expected to rise steadily. Construction companies are, hence, considering it profitable to develop sites and invest in properties of the U.K (Harrison and Leitch, 2010). In order to boost the housing and development sector, foreign investors are devising different types of schemes. Since population is consistently rising, it is essential for property developers to construct more homes. A recent survey had estimated that it is essential to build at least 150,000 new homes each year so as to be able meet housing requirements of the growing population (Haveman and Sexton, 2008). In the recent years, many real estate developers from the U.S. have increased their investments in the U.K. The positive market trends and steady growth in real estate have been successful in attracting foreign investors (Berry