The response of the housebuilding industry to the downturn is to stop building and cast off the very people it will need to help it recover. We have to be far more imaginative, says David Lock
We know we will complete fewer houses in 2008 than in any of the past 100 years. We entered the economic meltdown needing 3 million new homes. We shall come out of it needing millions more. This is an obscene failure of the market and of the regulation of the use of land.
I’m certain the housing industry will be shaken by this downturn. And it needs to be. It had started to behave as if it were providing a discretionary commodity like a patio heater, a speed boat or cider. But a decent home of one’s own is a basic human need. There is no shortage of people wanting a home, so why has the industry shut down, and why has the government let it?
Among the first victims of this slump have been the people who build the houses. Construction workers have been cast off at short notice and building programmes have shuddered to a halt. Only the wisest companies have taken care to retain their workforce, aware of the scarcity of their skills and of the value their loyalty will have when there is a shortage of labour. To keep these people, these companies are continuing work on scaled-down projects and picking up social housing contracts. Shame on those who have simply shut up shop.
The second wave of victims are the marketing teams – the people who have to sell homes. As people are no longer walking into showrooms and asking to buy houses, sales teams have been cut, but this shows a severe lack of inventiveness. Car makers in the same situation would devise a variety of acquisition packages suited to the changing market – for example, 0% interest, lease, contract hire and more. For housing, however, the variety of packages is small, inflexible and uninspired.
The third wave of victims are the strategic land teams of housebuilders. Cutting these jobs will soon be regretted. Planning cycles are now typically five–15 years and strategic land teams bring in the raw material. Shut off that supply and all housebuilders will be buying in “oven ready” land at premium prices at the same time. The successful pattern has long been clear – buy land when it is cheap in the bear markets and build through the bull markets. To cut off the long-term pipeline of land seems very strange.
A fourth and often forgotten group of victims are those that bought homes in high-density development just before the market collapsed. We saw this happen during previous recessions: the buyers of Cabe-approved “urban villages” find themselves unable to commute to distant jobs because of the lack of public transport.
This time we must learn that good quality family housing with gardens will always sell, even in bad times. That is because they are good value for money, meet the market’s needs and are adaptable.
We must learn that the misfit between the millions of people who want homes and what the industry is providing is caused by a lack of imaginative financial deals available and available varieties of tenure. We must also learn that the industry relies on its people, who need to be nurtured through good times and bad, and on a supply of raw material.
“Why should I care?” might come the voice from the chairman. To which I would say that one consequence of this behaviour might be more acquisition of development land by public bodies at something like existing use value. A whole body of legislation will have to be dusted off, and many amendments processed to overturn rulings on compensation by the Lands Tribunal and on property rights by the High Court. I foresee rising political enthusiasm for this in all political parties – none can afford a housing shortage, for it hurts people and the nation’s competitiveness.
Land in the right place for development at the right time to the highest possible standards is not a lot to ask. Then people who build houses can get on with it.
David Lock is chair of planning consultant David Lock Associates and vice-president of the Town and Country Planning Association