Effects of the Stock Market on the Construction Division

Abstract

The connection between stock and real estate charges has attracted interest in research on the effect of wealth on intake. In the subsequent literature, mechanisms that could lead to a causal relationship between inventory costs and actual property costs have been proposed. The first mechanism, known as the wealth effect, contends that investors' demand for real estate will rise as the stock market rises due to unexpected wealth gains. As a result, the real estate market will trail the stock market. The second system, the so alluded to as credit-cost impact, underscores that land fills in as security to specifically FICO rating controlled organizations. These companies' balance sheets would look better and their borrowing costs would go down if real estate fees went up a lot. Companies will increase their level of funding activity as a result, and inventory costs will rise as a result. The credit-price impact predicts that the real estate market will outperform the stock market based on this logic. In general, most empirical studies provide supporting evidence for the wealth impact.