The overall self-build market in
the UK is estimated at around 15 – 16,000 units and worth over £4
billion in 2006. The market has witnessed modest growth in volume
terms, though value growth has been much stronger in recent years,
rising by over 70% during the 2000-06 period. Estimates of annual
market volumes range up to 25,000 units, but our view is a more
conservative estimate of completion levels, with self build
accounting for around 7% of housing output by volume. Volumes are
growing slowly primarily due to lack of availability of suitable
building plots, rather than subdued demand Overall market value is
estimated at around £4 billion in 2006. Material costs are currently
worth an estimated £1.3 billion, labour costs estimated at £0.98
billion and land costs which have miscellaneous costs estimated to
be worth £0.07 billion.
The market can also be divided into 3 generic
construction methods - timber frame housing, traditional brick and
block, and other new construction materials. Share taken by timber
frame is increasing and now accounts for around 25% of the market by
volume, with the majority of installations using prefabricated kits.
In terms of profile, there has been a shift from
those on low incomes to consumers in the ABC1 social grouping on a
relatively high income who are looking for better design, higher
specification and value for money in a new home. In addition, the
sector has attracted a growing number of builders seeking a career /
lifestyle from self build who are now typically on their third /
fourth project etc. and have benefited from strong underlying growth
in prices to generate a good income.
The wide ranging number of products involved in the
self-build market means that the distribution structure in the
self-build market remains fragmented, though builders merchants
account for over 50% share. Timber kit suppliers, Electrical
Wholesalers, Specialist Distributors, Direct Supply are also key
channels, while the Internet is also growing in importance.
Product supply in the self-build market is very
fragmented. Each of these suppliers operates to a greater or lesser
extent in the self-build market and ranges from timber frame kit
manufactures to producers of screws and fixings. In the private
sector, the trend towards higher value products is expected to
continue to add value to the sector, as self-builders look for more
environmentally-friendly products, greater energy efficiency,
enhanced aesthetic designs, functionality, and products which
renders the overall self-build process less complex.
Reducing carbon emissions and saving energy will
continue to have a significant impact on the way in which new houses
are constructed in the self build sector in the future, whether
through new technologies, such as the use of combined heat and
power, ground source heat pumps, and other renewable technologies
such as wind turbines and solar panels. However, many of the
technologies are on trial to test whether they are technically and
commercially acceptable and many appear to be some years away before
they become serious alternatives in the supply of energy and the
subsequent reduction of CO2. eg: Ground source heat pumps have a
high investment cost and long payback period.
In addition, recent Government measures such as the
introduction of the Energy Performance Certificate to be submitted
with every home sale, and Government plans that all new builds will
be carbon neutral by 2016 are highly likely to influence the
construction materials and methods used in the self build sector.
Forecasts for the UK self-build market are reasonably
optimistic. With a growing number of media sources promoting the
self-build concept there is forecast to be significant growth in
value to reach an estimated £5.5 billion in 2010. Volume growth,
however, will be modest. An increasing proportion of the population
would like to own a better quality accommodation than they could
afford on the property market, which is particularly an issue at
present given the rapid rise in house prices in the last 6 years.
However, a shortage of suitable plots at an acceptable cost is the
major limiting factor to growth.
In European countries, self-build often represents as
much as 60% of all new houses built and with this figure at around
7- 8% in the UK, it shows that the market is still someway behind.
As awareness continues to grow, the self-build market should
experience reasonably steady levels of growth, particularly in
Scotland, although indications are that England will also experience
a modest increase in volume. However, as indicated above, the
market will continue to be constrained by lack of available land,
particularly in areas of severe housing shortage, which will be
exacerbated by the substantial Government investment in social
housing in the 2006-10 period, and there is no real prospect of any
significant easing of this key limiting factor.
