Last week’s election result provided us with one thing that the construction sector had already had enough of, more uncertainty.
Promises vs Uncertainty – a view on the post election housing market
The current mood in the housebuilding world is juxtaposed by two variables, desire and uncertainty. The desire, and this is emphasised in the latest NHBC figures where more than 42,000 new homes were registered in Q1 (we’ll come back to these figures later), to build houses could not be stronger. However, this is continually tempered with the four pillars of sterling fluctuation, raw material shortages, skill shortages and planning laws. This is without the underlying Brexit challenges that have rumbled on for nearly a year now with very little in terms of real progression. Uncertainty, coupled with uncontrol and novelty form the physiology of stress. Stressed would certainly be a great adjective for where the building industry currently sits.
The three main parties’ manifestos all stated a desire to mend a broken and dysfunctional housing market.
- We will meet our 2015 commitment to deliver a million homes by the end of 2020 and we will deliver half a million more by the end of 2022. We will deliver the reforms proposed in our Housing White Paper to free up more land for new homes in the right places, speed up build-out by encouraging modern methods of construction and give councils powers to intervene where developers do not act on their planning permissions; and we will diversify who builds homes in this country. (Tory Manifesto 2017)
- After seven years of failure, the Conservatives have no plan to fix the housing crisis. Since 2010, housebuilding has fallen to its lowest level since the 1920s, rough sleeping has risen every year, rents have risen faster than incomes, there are almost 200,000 fewer home-owners, and new affordable housebuilding is at a 24-year low. It doesn’t have to be like this. Labour will invest to build over a million new homes. By the end of the next Parliament we will be building at least 100,000 council and housing association homes a year for genuinely affordable rent or sale. (Labour Manifesto 2017)
- The housing crisis in Britain has become an emergency. For far too long Britain has built many fewer homes than we need; unless we build enough to meet demand, year after year, we will find that housing costs rise further out of reach. That is why we have set an ambitious target of increasing the rate of housebuilding to 300,000 a year – almost double the current level. These new houses must be sustainably planned to ensure that excessive pressure is not placed on existing infrastructure. We will: Directly build homes to fill the gap left by the market, to reach our house-building target of 300,000 homes a year, through a government commissioning programme to build homes for sale and rent. We will ensure that half a million affordable, energy-efficient homes are built by the end of the Parliament. (Liberal Democrats Manifesto 2017)
There are big numbers being banded about there without much science on the real face of it for the electorate, sitting alongside. Let’s take the opportunity to look at the number of dwellings that have been created in the last 5 years… (source gov.uk live table on house building numbers)…
- 2012 – 141,530
- 2013 – 135, 330
- 2014 – 144,980
- 2015 – 170,990
- 2016 – circa 167/168k
So that would suggest we are still a long way off the 200k target in two of these manifestos (Cons & Lab). It would suggest that the Lib Dem manifesto of 300,000 dwellings is so far out it is just not realistic in terms of build numbers with current methods and infrastructure. (this is without coupling in the skill shortage and potential ceasing of European migration and the workers that come with this). Furthermore, the Labour want of at least 100,000 council and housing association homes a year is nearly three times the circa 33,000 houses built by council and housing associations over the last two years (same source) and over double the best year ever of 42,200 dwelling built back in 1995 which was the highest number over the last 21 years and really heading back to the larger numbers of the early 1980’s (109k built in 1980!).
If we head back to the latest NHBC stats then you see a sizable increase of registration (this doesn’t mean they are completed houses yet, just registered.) 31,197 registrations in the private sector, up 10% from the same quarter the year before and 11,273 new homes in the affordable sector, which is a faith confirming leap of 40% from the previous year’s Q1. But woefully shy of early eighties levels and the 25k needed under the Labour manifesto.
Delving into the CITB ‘Skills and Training in the Construction Industry -2016’ (citb.co.uk) –
“……18% of employers reported that they had had difficulty in recruiting bricklayers…..”
Simply put, 1 in 5 house builders are struggling with finding, employing and retaining brick layers. At current build levels. Add 25% minimum additional builds on and the number significantly increases. The report alludes to other skill sets for housebuilding but bricklayers remain the most prominent challenge.
Where next for the post election housing market?
The novelty of the scale of housing challenges the industry faces isn’t the biggest issue to alleviating the stress. Uncertainty also continues to play a crucial part of the stress trilogy whilst lack of control continues to play a significant part of the ‘power of the triangle’ sum that allows the housing industry to flourish and grow. Until all points of the triangle are addressed, challenged and planned, the aspirational numbers will continue to be under pressure whilst the desire remains strong.
Chief Operating Officer
Robinson Manufacturing Ltd