Price elasticity of supply is a measure of the sensitivity of (quantity) supplied of a good or service to a change in the price of that good or service.
Overall, the supply of manufactured goods tends to be more price elastic than the supply of agricultural goods:
Low price elasticity of supply for new housing
Production time frame:
Limited spare capacity / low stock levels:
The supply of new housing is usually inelastic.
Therefore house prices are determined mainly by demand-side factors
However, new technology might be increasing the price elasticity of supply for some types of housing. The emergence of "flat-pack" housing units and additive manufacturing (i.e. using giant 3D printers in the construction process) might reduce the time frame in which new housing can be built and made available. Housebuilding has seen relatively little significant process innovation over recent decades, but the next ten years may seen notable improvements in modular construction with sustainable homes built to a high standard and much more quickly than in the past.
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