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The new build market for heating and electrical systems
was worth approximately £350 million during 2003, showing moderate
annual value growth of between 3-5% between 1999 and 2003. Estimates
indicate that the new build market represents approximately 16% of the
total domestic heating market, approximately 27% of the domestic UK
lighting market, and approximately 22% of the total UK domestic wiring
accessories market.
In 2003, the new housebuilding market was one of the
leading sectors within the UK construction industry, contributing just
over 31% in terms of output value. Output in the overall housing sector
now stands at over £15 billion, compared with £12 billion during 2002,
reflecting the general buoyancy of the market during the year. Of new
housing work, private sector output showed increases during 2003 of 27%,
with public sector housing also rising but at a lower rate of 17%.
Private sector new housebuilding levels have remained
relatively low against rising house prices, and although completion
levels increased marginally in 2003 there are no indications of any
significant upturn in output. The issue of housebuilding volumes has
continued to rise up the political agenda with the publication of the
Barker Review in March 2004, which highlights current problems in
planning, brown-field developments, land banks and lack of skilled
labour, which are all restricting the potential to increase volume
output.
Despite initial reservations by the housebuilding
industry at the beginning of 2003, it was a relatively healthy year for
house prices and the housebuilding sector in general, characterised
by housing growth in the regions away from the South East.
Levels of housing
completions were maintained during 2003 and rose by 2% to reach some
175,000. Forecasts for the completions sector indicate estimated growth
levels of between 2-3% per annum between 2004/7. Factors underpinning
this growth include the relatively low level of interest rates and the
forecast levels of spending on social housing committed by the
government in its Sustainable Communities Plan, which aims to
provide 200,000 homes by 2016 in the four growth areas in the South East
and should contribute significantly to completion levels over the next
few years. Housing Starts increased by around 3% from
2002 to reach 187,000 in 2003, with levels reported to be up 4% in March
2004 on the same period in 2003.
In recent years the new housebuilding market has changed
considerably with the number of housebuilders greatly reduced due
to consolidation within the market. There are around 20 quoted
housebuilders in the UK with a market capitalisation of between £20
million and £1.5 billion. The largest player by volume is Barratt
Developments, closely followed by George Wimpey and
Persimmon. These three firms continue to dominate in terms of unit
completions and together accounted for an estimated 22% of the market
during 2003. Taylor Woodrow has continued to prove itself a key
player in the housebuilding market with the acquisitions of Bryant Homes
for £540m in 2001 and Wilson Connolly for £499m in October 2003 – the
largest corporate acquisition in the housebuilding market during the
year.
In 2003 the total UK domestic market for heating and
electrical systems was estimated to be worth around £1.8 billion at
manufacturers selling prices with forecasts indicating annual growth of
around 3% to reach an estimated total of almost £2 billion in 2006. The
overall domestic heating market was estimated to be worth over
£1.1 billion at manufacturers selling prices, with the central
heating sector, composed of boilers, radiators, pumps and controls
representing 65% of the market and worth around £733m (MSP). Water
heating products are currently estimated to represent around 14% of the
domestic heating market, contributing a value of around £157m at
manufacturers prices. This sector consists of gas water storage and
electric water heating. Gas water storage is the largest segment in this
sector, currently estimated to account for around 68%.
In 2003, the total domestic electrical systems market was
estimated to be worth around £689m in manufacturers selling prices, an
increase of 2% on the previous year. Within this market, the domestic
wiring accessories market was worth an estimated £268m (MSP) in 2003 and
the domestic lighting sector an estimated £421m (MSP), representing
around 33% of the market in 2003.
In 2003 the new build market for heating
installations was estimated to be worth £175 million and new build
electrical systems had a similar approximate value of £175 million.
During 2003, the new build market for wiring accessories was estimated
to be worth £60 million, while new build lighting was valued at
approximately £115 million.
Developments within the new build domestic heating and
electrical markets are driven by a number of regulatory, environmental,
technical and social factors, with the main trends in the market
focussed on changes to parts L, P, G and J of the Building
Regulations, an increasing use of sustainable and renewable
forms of energy and fuel efficient appliances and technological advances
in smart home technology. Commercial developers are increasingly
being faced with the challenge of making homes more energy efficient,
whilst retaining economic viability. With energy costs predicted to rise
together with increasing consumer desire to reduce heating and
electrical running costs within the home, housebuilders are now looking
beyond the more traditional forms of energy provision to photovoltaics,
combined heat and power schemes, ground source heat pumps and condensing
boilers.
Within the electrical systems sector, there have
been a number of trends emerging including an increase in the number and
type of domestic appliance, the growth of home entertainment systems and
an increase in personal computer ownership and home-working practices.
Future demands on electrical installation equipment may see the
introduction of compulsory low energy lighting, home security systems
linked by broadband, increased use of air-conditioning systems due to
climate change, heating and lighting controlled remotely via the
internet or mobile phone and smart cabling solutions to control
security, lighting and home entertainment.
The AMA survey conducted included a cross section of
local, regional and national housebuilders, confirmed a number of key
trends, which have taken place over the last four years since the
previous survey.
Over the last four years there has been an increase in
the general understanding about the SAP ratings. All of the
housebuilders questioned were certain as to the percentages of their new
build homes that achieved the recommended rating of 80 or more and in
addition more
private housebuilders are adopting the Building Research Establishment’s
Eco-Homes scheme as measurement of
the environmental credentials of their
developments.
The survey also revealed that although central heating
is still a very popular heating choice installed within new build homes
during 2003, other types of system are becoming more popular with
housebuilders. Traditional boilers have become less popular and
are now being replaced by combination boilers, especially in smaller
homes and flats and condensing boilers, which achieve higher levels of
energy efficiency.
Recent trends in the new build sector are characterised
by a demand for larger, executive homes, increased Internet penetration
and personal computer ownership and have led to most housebuilders now
fitting a higher proportion of power points into each room, on
average four or more. Many developers are now reporting increased
consumer demand to fit four or more power points per room as standard,
citing increased computer and home entertainment usage as the primary
reasons. The survey also revealed that an increasing number of products
are now being fitted ‘as standard’ by housebuilders in new homes
including shaver sockets, dimmer switches for lights, alarm
systems and security lighting.
Technical
and brand specification for heating and electrical
products are still mainly the preserve of the housebuilder themselves,
although an increasing number of architects, either ‘in-house’ or
external, are now performing this function. Purchasing and
installation responsibility is still overwhelmingly undertaken by a
sub-contractor, and an increasing number of housebuilders now have a
national agreement purchase in place for the procurement of products,
usually undertaken as a centralised, head office activity.
Important considerations when specifying and
purchasing heating and electrical products in new build homes include
product specification, product value and price, product availability and
distribution, manufacturer quality assurance and after sales service.
These criteria were deemed as essential to ensure that systems continued
to perform to specification, meet environmental criteria and offer best
value for the consumer.
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