1. At first, the rise in the GST will have relatively little impact upon
the decisions of new home buyers to purchase homes. This economic
factor is due to the fact that, the building and the construction
industry cannot respond to changes in supply costs very quickly,
because of the nature of the business and the nature demand in the
construction sector. For instance the homes currently up for sale,
regardless of the cost of the items used to construct these homes,
will be affected more by last year’s prices of building supplies
rather than current price structures. Thus, even though demand
usually goes down as price goes up, the prices of homes will not
immediately rise because the costs of supply last year are what is
affecting the prices, by and large.
Thus, although conventional supply analysis would suggest that as
supply prices go up, the price of the goods produced go up and thus
demand goes down”the supplies that go into the homes on the market right
now really reflect the prices of construction supplies of last year
rather than this year. However, if all other factors remained unchanged,
next year, as the price of the supplies involved in the construction
industry began to increase, because of the rise in taxation, the prices
of the homes and buildings that made use of these materials will also
have to increase, to offset the increased costs of supply. If all
factors upon the demand side of the equation remained equal (such as
individual’s incomes, the desire for new families to start new homes
within a particular area, the economic climate and confidence of the
nation as a whole, the employment rate, etc.) demand might very likely go
2. However, optimistically, there seems a possibility that there will be
other factors that offset the potentially ne…