Executive Summary
The British housebuilding market accounted for 38.6% of construction output in 2000. This equates to a total market size of £26.85bn at current prices. Although seemingly positive, the industry has been hindered in recent years by planning problems, which have restricted performance. Sectors that constitute the housing market are new housing build and repair, maintenance and improvement (RMI), with further subdivisions into private and public works.
The housebuilding industry is typified by a myriad of smaller general builders, which undertake extensions and other housing refurbishment work. More specifically, the National House-Building Council (NHBC) had 15,372 builder groups on its register in 2000. Of these, the 25 largest builders accounted for 58% of all starts. This reflects the trend over the last year or so towards consolidation at the top end of the marketplace. Persimmon PLC for example, acquired Beazer Group PLC in March 2001 to become the largest volume builder in the UK market. This position is challenged by George Wimpey PLC's offer for the Homes division of Alfred McAlpine PLC in August 2001. Many house builders have seen their profits increase in recent years, and they perform reasonably well when compared to overseas contractors.
From a demographic point of view, the number of households in Great Britain is approximately 25 million, with almost three in ten households comprising one person and around 68% of all housing stock being owner occupied. There are forecasts of a 14.3% rise in the total number of households in England alone from 2001 to 2021, with the number of single-person households, in particular, increasing by 34.3%. The targets for higher-density housing may, therefore, lead to a growth in high-rise housing and apartments, with urban regeneration and mixed-use developments a key feature, given a government target for 60% of new housing to be on brownfield sites by 2008. The South East, in particular, will require innovative, affordable solutions for an ever-increasing population, with an estimated 43,000 new homes required each year.
Against a backdrop of comparatively low interest rates and rising house prices but with subdued performance in housing volumes and problems with planning approvals in the immediate future, Key Note forecasts a total volume growth of 5.7% in the new housing sector but an impressive 20.5% in the repair, maintenance and improvement (RMI) sector over the period 2001 to 2005. There are good prospects for refurbishment of social housing, as much of the stock is now being transferred to Registered Social Landlords (RSLs) and private refurbishment will remain buoyant.
The period is likely to be typified by increased use of prefabrication to reduce the need for skilled labour onsite, as well as to reduce building and costs. Moreover, imminent legislation calling for improvements in energy efficiency and sound insulation within dwellings may lead to increased product development. At the same time, there will probably be further industry consolidation to gain strategic land banks and improvements in internal processes to retain competitiveness. Companies are likely to develop a more responsive, customer-focused approach to differentiate their products.
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