Housing
completion levels in 2006 remain far short of levels required to
match the growth in demand, according to the 6th edition of the ‘Housebuilders
Market – UK 2007’.
The report, reviews the housebuilding market in
the UK in terms of output by volume and value, output by sector,
trends in house prices and factors influencing market performance.
The new edition also provides an international perspective and
compares UK output and housing stock to other key international
markets.
The report’s focus is on a review of the major
housebuilding groups with a detailed analysis of key performance
indicators for each company as well as market shares, corporate
activity and key trends. The report indicates that the number of
completion levels grew by around 2% in 2006, a disappointing figure
given the government’s aims to address the current housing shortage.
Changes in demand structure, driven by demographic and social
factors such as increasing migration levels, an ageing population
and a growing number of single person households, have led to a mis-match
between supply and demand of housing. It is estimated that the
overall under-supply of housing will remain a feature of the market
– current projections suggest the formation of 223,000 new
households annually in England until 2026, an increasing number of
which will be single person households. This compares with current
housebuilding levels in England at around 160,000 units.
Although social housing completions increased
strongly in 2006, and despite significant government investment in
recent years, there remains a serious shortage of affordable
housing. However, the government’s commitment to the sector looks
set to continue and new concepts as well as the wide range of
companies involved in the sector should benefit.
Corporate activity levels have been high during
the year, with a number of mergers, acquisitions and buy-outs having
been announced. On the basis of these, it is estimated that the 3
leading players in the market could account for over 30% of the
market in 2007, depending on individual company performance.
However, as the structure of housebuilding changes, the major
housebuilding groups face increasing competition from commerical
developers and construction companies, some of which are already
strong in the apartment, mixed-use and social housing sectors.
Construction of apartments and flats has
increased strongly in recent years, driven by rising land costs, a
focus on affordable housing, planning pressures and an increase in
residential led mixed-use developments on brownfield land, with
flats now accounting for an estimated 48% of all dwellings built.
growth. The use of MMC has increased strongly, driven by
environmental factors and the need for cost-effective and time
saving solutions. In summary, the under-supply of housing and a
generally stable economic climate are likely to sustain demand for
housing and continue to drive up house prices. However, land and
planning issues and rising build costs may affect profit margins,
whilst the recent interest rate rises are likely to affect consumer
affordability.
