The following appeared in The Homebuilder magazine, a local publication with a focus on construction and sale of real-estate properties:
"According to the most recent survey of our readers, nearly 70% of the respondents indicated that they are planning to build or purchase a new home over the next 2 years. These results indicate that the growth in the construction industry is likely to accelerate in the near future. Therefore, this industry continues to offer lucrative opportunities for investment."
Discuss how well reasoned you find this argument.
In the article, author concluded that construction industry will continue to offer lucrative opportunities for investment. Author has attributed this to the fact that nearly 70% readers of 'The Homebuilder' magazine are planning to build a new home over next two years. The reasoning that author has given about the future prospects of construction industry is not convincing enough.
Firstly, author has assumed that the readers of 'The Homebuilder' magazine represents the general public. 'The Homebuilder' is a magazine focused on construction and sale of real-estate properties. Hence it can be inferred that its readers are people who are interested in real-estate properties; their responses don't necessarily represent the sentiment of general public.
Secondly, author made an assumption that if 70% subscribers of 'The Homebuilder' magazine build or purchase a house in next two years, it will automatically be good for the future of construction industry. Author has not taken the subscriber base of the magazine into account. It might be possible that subscriber base of the magazine is too small and consist of individuals with less net worth. In that case, even if 70% of the readers purchase or build a house in next two years, it might not be that much significant for construction industry as a whole.
Thirdly, author has not considered the number of people who are planning to sell their houses. If too many people sell their properties in the next two years, the market will be flooded with properties for sale. New buyers will then buy existing properties (which might be discounted) instead of constructing new ones. In this case also growth in construction industry will not accelerate.
In sum, I can concur that author's reasoning is not convincing enough and author has made certain assumption without giving evidences supporting them. There is no reason to believe that growth in construction industry is will accelerate in near future. To conclude so, author needs to consider additional factors such as government policies, tax benefits to construction industry etc into account. These factors have profound effect on future of any industry and need to be evaluated before concluding a bright future for the construction industry.
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