Executive Summary

The new housebuilding market in Great Britain was valued at £7.13bn in 1995. The estimated industry size of £7.08bn in 1996 compares with a smaller size of £6.08bn in 1992, when the industry was at the trough of recession. Thus, between 1992 and 1996, new housebuilding has grown on average by some 6% per annum. In terms of the number of units, Key Note estimates that total housing starts in Great Britain were 167,500 in 1996, up from 167,200 in 1995. Completions were estimated at 182,000 in 1996.

Within the above totals, there are the two main markets of public and private housing. Private housing is by far the larger, with an estimated value of £5.56bn in 1996, while public housing was only estimated at £1.52bn in that year.

Looking beyond the above broad sectors, the split of dwellings built includes terraced houses, detached houses, semi-detached houses, bungalows, and flats and maisonettes. In 1995, these categories accounted for the following percentage of starts: terraced houses (18%), semi-detached houses (22%), detached houses (37%), bungalows (6%) and flats and maisonettes (17%). Over the past 5 years, there has been a rise in the proportion of semi-detached and detached houses. In part, this has been due to falling prices, allowing many first-time buyers to enter the market at a higher level. In the late 1980s, all that most first-time buyers could afford were terraced houses or flats.

Following at least 6 years of stagnant demand, the housing market is at last coming out of recession and, having gone through a period of widespread restructuring, the housebuilding industry is better placed to profit from any upturn in demand. The most recent indicators show that house prices are rising fairly strongly, while overall economic conditions are more favourable than at any time this decade, with rising earnings, low inflation and relatively low interest rates providing an encouraging background for rising demand. However, the air of rising confidence is leading to steep land price rises, while tighter planning controls are hampering builders' efforts in securing land for development.

Over the next few years, the private housing market is expected to improve from a low of 134,000 starts in 1995, with their number rising to 161,000 in 1998. In the public sector, progress is expected to be hampered by tight Government funding, with starts unlikely to exceed 30,000 (down from the 1995 level of 33,000) by 1998.

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