Housebuilding has come a long way. But even with new players on the scene, don’t be conned into thinking the ‘supply to match demand’ problem has vanished
The pace of change in the housebuilding industry is remarkable, not least because it contrasts so dramatically with past trends. For many years, the industry appeared stuck in a time warp.
Its products were predominantly detached houses in low-density, greenfield sites that looked much like they would if they had been built 50 or even 100 years previously. And they seemed to symbolise the industry. Modern methods of construction passed it by, and government-inspired moves to raise standards and environmental performance were generally resisted as unwelcome interference.
I well remember my discussion with the industry in the late 1990s about the Egan report, PPG3, the Housing Forum and its customer satisfaction surveys, as well as changes to parts M and L of the Building Regulations.
Equally, the structure of the industry appeared to defy wider industrial trends. There was no pressure for volume growth; indeed, the industry seemed pleased that there were no Tesco-lookalikes disturbing its comfort zone.
Good margins were made on relatively low output levels and criticisms of the industry for not increasing production to match consumer demand were swatted aside by reference to the planning system, which was held uniquely to blame for underprovision.
How different the world looks today. Housebuilders have become increasingly active in the cities, with brownfield sites taking the lion’s share of new developments.
Mixed-tenure and mixed-use developments, which used to be regarded as anathema by many housebuilders, are recognised not only as viable models, but also as the right way forward for many urban developments.
The industry’s interest in keeping prices high is not unconnected with the failure to produce sufficient new homes to match demand
Far from complaining about pressure for higher environmental standards, the HBF under Stewart Baseley’s leadership is in the vanguard of work to establish how the industry can meet the challenge of climate change. The target of zero-carbon new homes within a decade is no longer unthinkable. Innovative construction methods and higher design standards are also very much part of today’s agenda, with the recently established National Centre for Excellence in Housing giving a new focus to the promotion of best practice.
At the same time, the structure of the industry is changing rapidly. Mergers and takeovers are generating players with the capacity to deliver 30,000 homes a year. And new entrants are threatening to challenge the cosy assumptions that used to dominate the industry. Tesco is combining residential projects with new stores while developers such as Land Securities are indicating their intention to become more directly involved in housebuilding.
All of this provides a fascinating backdrop to the report recently commissioned by Ruth Kelly from John Callcutt. Not only does John have a strong track record of innovation from his time at Crest Nicholson, but he also possesses an understanding of the wider context from his work at English Partnerships. He has expressed trenchant views on the need to explore different business models. Expect more fireworks when his report is published.
As if this were not enough, we now have a further grenade lobbed into the pond by the London assembly in its recent report on delays in getting housebuilding schemes off the ground. According to the assembly, planning permission has been granted for more than 88,000 homes across London, with the annual rate of planning approvals more than doubling over the past decade.
From my perspective in Greenwich, which has the highest number of outstanding permissions for new residential development in London, I have always been a little sceptical of claims that planning alone is to blame for insufficient supply. It is more than two years since planning permission was approved for 10,000 homes on the Greenwich peninsula, alongside the highly successful Greenwich Millennium Village. Yet, although the sites are clear and ready for building, not a single housing start has been made to date.
This is not to say that planning delays and political opposition to new housing are not factors in some areas. They are. But the reasons for our failure to produce sufficient new homes to match demand look more complex, and the industry’s interest in keeping prices high is not unconnected.
So expect some lively debates about how the industry meets the country’s needs over the coming years. Housebuilding is certainly not going to be a backwater.
Nick Raynsford is MP for Greenwich and Woolwich and chairman of the Construction Industry Council