Reblog-the future role of the SME sector in housing supply

Source: Laing O’Rourke Centre for Construction Engineering and Technology

  • The average number of housing completions (DCLG, 2015):
  • From 1990 to pre-crisis: 181,000 per year in the UK and 143,000 in England
  • After crisis to 2015: 140,000 in the UK and 115,000 in England
  • From 2014: annual deliveries are back at 1990 levels.
  • At present, around 60% of new homes are built by 10 companies.
  • Current government target is to add 100,000 homes per year to the nation’s current output of around 140,000 new homes.

Contributing factors:

  • Reduction in government-funded council house building since 1970s;
  • Slow transaction cycle in housebuilding – macroeconomic volatility during the transaction period is a significant risk for SME housebuilders;
  • Brownfield sites are not always in economically-viable locations for residential development – the associated infrastructure investment to improve connectivity adds to the financial uncertainty.

In a bid to increase housing supply, governments focused on major housebuilders and released huge tracts of public land for residential development. Planning departments also have increased the number of homes permitted. However, due to risk aversion, large sites yield homes at a slower rate than small sites.