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Self-build
Market – Completions by Volume 2005-2010
 During
2008, new housebuilding completions in England declined by 19%,
from 174,530 to around 140,000 whilst, of greater concern, housing
starts declined by 37% - from 166,350 to 105,000. Although official
figures are not yet available for the rest of the UK it is likely
that the rate of decline has been of a similar scale. Inevitably,
the underlying reasons for the housebuilding recession have
affected the self build market and, whilst self builders may
generally be in a stronger financial position than most homebuyers,
many have been reluctant or unable to dispose of any assets they
may have such as their existing house, equities or cash at such an
uncertain time in order to finance a self build project.
However, our view of
the self build sector is that the downturn in volume has not been
as severe as in the new housebuilding market, nevertheless
estimated volumes of self build completions in the UK have reduced
during 2008 as shown in the chart below. The figures indicate a
decline in self build in volume terms to an estimated 14,000 units.
It is difficult to be precise
in volume terms of self build homes owing to the highly individual nature
and definition of self build, in addition to there being no official
statistics. While some estimates indicate a market size of over 20,000
units, we believe the actual figure is much lower, when assessing the
market in terms of the property owner having a significant influence in
the design / build process.
As the chart above
illustrates, in 2008 self build accounted for an estimated 14,000 or
around 8% of the total estimated housebuilding completions in the UK of
around 180,000, and in recent government commissioned reports much has
been made of the sector’s importance and significance as a proportion of
total housebuilding.
Material and labour prices
will of course affect the cost of the build, but no significant price
rises are anticipated, at least in the short term. Conversely, it is more
likely that material and labour prices may well reduce in the short term
as more skilled trades people become available following the major
reduction in staff by the housebuilders and sub-contractors in 2008/early
2009. As a result, our forecasts are for further market declines by value
in 2009-10, with only a modest recovery in the 2011-13 period.
Notwithstanding the current
economic and property market uncertainties, the biggest difficulty facing
those who wish to self build continues to be the lack of available
building plots. There appears to be an underlying demand for self build
and with land values at their lowest for some time the sector could see
significant growth if the availability of plots improves.
At present, volume developers
have virtually withdrawn from land buying, but there are no indications
to date that this has freed up the availability of land for ‘self
builders’. In the medium term, this may encourage the formation of more
‘cooperative’ schemes to divide and develop larger plots for groups of
self builders, but these take time and assistance to emerge.
As a result, our forecasts
are for a small downturn in volumes in the sector, before experiencing
modest recovery, but restrictions in plot availability will remain the
limiting factor to long term growth. |
