Real estate underpins the operation of the economy; it is a store of wealth. For many households, their most significant asset is their home, while institutional funds are increasingly targeting commercial real estate. All firms need real estate as the base for their productive activities. It is a key input in the production and distribution of goods and services. Factories, warehouses, offices and shops facilitate the operation of the economy. The well being of society depends on the provision of adequate housing. Property development shapes the structure of our towns and cities and the use of land shapes the countryside. A full understanding of economy and society demands an understanding of property markets.

Real Estate and the Economy
Real estate, both residential and commercial property, makes a key contribution to the economy. It has a number of distinct features. Real estate is fixed in location; no two properties are identical; property has a long life; the development and purchase of real estate is costly. Government plays a major role in regulating the market through the planning system, taxation and environmental policies. Decisions about real estate are complex and fascinating and play a key role in the competitiveness of economies. Firms use commercial real estate for their business operations. They must decide how much space they need and where it should be located. They must choose between renting and buying and, because land and property is scarce, they must compete with other firms for buildings. New supply of space depends on the decisions of developers, banks and planning authorities. The operation of the housing market determines household access to a decent home. House prices have a major effect on family wealth, on inflation and on consumer spending.

These key impacts on the economy and society lead to pressure for Government intervention. Despite differences, there are common economic and legal factors shaping both the commercial and the residential markets.