Supply and demand
Government plans to ramp up housebuilding to 300,000 homes a year have so far failed to deliver, so what does that mean for new build in the long term?
The demand is growing. The supply isn’t. It appears the laws of supply and demand don’t apply to the delivery of new homes.
Last month [June] a committee of MPs found that two-years after the government set out its ambitious plans to kickstart the delivery of new homes, progress has, as far as it exists at all, moved at a glacial pace.
A report by the Government ‘watchdog’ the Public Accounts Committee (PAC) stating that the Ministry of Housing, Communities and Local Government (MHCLG) did not have a coherent strategy and that plans for the delivery of new homes were “way off track”.
It echoed topics raised by a National Audit Office investigation published in February pointing to the gap between the historic average of 177,000 new homes a year delivered between 2005-06 and 2017-18 and the 300,000 home target.
In fact, if anything things appear to have become worse. According to the most recent annual statistics published by MHCLG, only 165,090 new-build homes were completed in the year to December 2018. The shortcoming attributed to an array of challenges from a reluctance among big developers to fund infrastructure and the availability of skilled labour, to the complexities of the planning process.
So, if you are supplying new build on either a large or small scale where does that leave you. Should you be ‘crying into your mug of builders’ tea’ or looking positively towards a future release of latent demand?
“It’s pretty clear that the 2017 housing white paper has so far failed to deliver”, says Ian Cocken, Director of Sales and Marketing Director, aluplast.“With a generation locked out of the housing market and with one eye to its future chances in the polls, we can be confident that housing is going to remain, very much on the agenda.
“A longer-term analysis suggests that new build, regardless of the size of your fabrication or installation business, is a very good bet.”
Opportunities ‘regardless of size’ of your business exist, as Cocken highlights, within the new build in part because of the Government’s ambition to break the stranglehold of big developers on the new build sector.
This included the charge in the 2017 white paper that large developers were guilty of ‘land-banking’- buying up sites but leaving them undeveloped to wait for market forces to increase their value – (something denied by big housebuilders!)
This should have led to new legislation which empowers councils to compulsorily purchase sites – a ‘use it or lose it’ rule.
The white paper also set out other proposals to address what it sees as the monopoly of big developers. This includes measures to encourage the release of smaller sites with limited appeal for larger house builders and the launch of the new £3billion Home Builders Fund aimed at smaller builders.
“It’s very difficult to detach progress – or perhaps more accurately the lack of it – from the wider paralysis of government caused by Brexit”, continues Cocken. “‘Remain’ or ‘leave’, no one would dispute that it’s been a distraction from the core business of Government.
“The other thing is that it’s done is to suppress house price inflation. With the affordability gap you could argue that that’s a good thing – but it’s not something to encourage housebuilders to build.”
UK house prices have flatlined for eight straight months as a declining property market in London and the South East drags down performance. According to the latest figures from the Office for National Statistics, the average selling price rising by 1.4 per cent to £229,000 in the year to April, down from 1.6 per cent in the previous month.
“Again, we need to keep perspective. Brexit has shaken consumer confidence but it’s not going to be terminal. Whichever direction it takes us, the long-term prospects for new build are good because the demand for new homes is indisputable”, says Cocken.
So what impact is this having on new build window supply specifically? “There are two key drivers. Energy efficiency and sustainability are driving housebuilding regardless of the scale of the project.
“The other is finish. Developers are switched onto the value-add that a colour delivers. This is particularly true of smaller scale builders – but also to a point – the bigger players.”
In addition to its housing availability crisis, the UK faces huge commitments to cut carbon emissions. So far, it’s been ‘kicking a can along the road’ towards meeting them but with housing accounting for a quarter of all annual carbon emissions the energy efficiency of new homes, and retro-fit improvement, are key priorities, something translated into increasingly demanding window and door specifications.
“The National Planning Policy Framework, which was revised in February this year, empowers local authorities to set new requirements for the sustainability of new homes locally, beyond those required nationally”, says Cocken
“Code for Sustainable Homes Level 4 is increasingly the standard starting point for new build. Energy efficiency and the through-life sustainability of product is critical.”
This has informed the development of aluplast’s of its PVC-U system offer. Its slim line Ideal 70 system has been developed to accommodate 24mm to optimum 40mm triple glazed options, easily achieving a WER A++ rating with standard components and A++ with specific profiles and IGUs.
It’s also driven aluplast’s development of the Ideal 4000. The cutting-edge thermally efficient 70mm PVC-U system is defined by a contemporary ‘SquareLine’ profile, which can achieve a thermally efficient WER A++rating and offers optional click-and-fix external aluminium finishing option.
It’s also supplied as standard in ecotech, also available as an option on the Ideal 70. This brings recycled content back into use, isolating it only in the core web of the product, and not in any surface facing elements of the profile, which means that aluplast can guarantee surface and finish quality.
“New build is defined by through-life performance but also end-of-life sustainability. Commercially, however, finish is an equally important driver. The investment we’ve made in our foiling capability means that we can be very competitive, something which delivers a distinct advantage to our new build customers.
“We’re also able to offer access to specialist finishes including aluskin and woodec, allowing our customers to combine exceptional design flexibility in a highly energy efficient window range.”
Woodec is available from aluplast in three ultra-life-like woodgrains: Turner Oak Malt, a subtle light oak finish; Sheffield Oak Alpine, a silvered oak finish; and slightly darker, Sheffield Oak Concrete. “The realism is exceptional. When you look at it on a frame it’s almost impossible to distinguish it from a timber product”, says Cocken.
“It’s no longer accurate to simply write off new build as being driven by price. Finish is increasingly important because the end homeowner wants and expects more, something that’s being employed, particularly by smaller regional developers to support sales.
“We’ve worked to develop a dedicated offer that delivers access to new build through the core performance of our offer. Then to build on that with the flexibility we can deliver on finish from foils through to aluskin.
“These are the products, which will carry our customers forward as latent demand is released within the new build sector.”