Some housebuilders this year will find a nice bonus in their paypacket, and that’s on top of a decent salary. But for others, something altogether less welcome is in store. Building knocks on a few doors …
The last few years of gloomy economic news have struck fear into the hearts of housebuilders throughout the UK. And as the world economic outlook darkens, the market still doesn’t feel like a safe - or lucrative - place to be. As the 2011 Housebuilder Salary Survey shows, apart from a lucky few this year who may even find a bonus at the bottom of their pay packet, the fate awaiting most housebuilders is more likely to be trick than treat.
Just three months ago, things were starting to hot up for housebuilding. Developers talked about kickstarting programmes, cash flow was looking steadier and build programmes were looking more robust. But a recent round of unwelcome news has sent a fresh chill through the industry. Global financial progress has gone into reverse, as the European and worldwide financial markets falter once again, threatening a bleak 2012. “The increase in unemployment figures to 2.57 million, particularly the 21.3% of 16-24 year olds is understandably a reason for lost confidence,” says Maria Pilfold, group HR director at housebuilder Taylor Wimpey.
Salary survey results
A survey of over 3,000 housebuilders by recruiter PSD Group and released exclusively to Building has revealed that confidence levels are low. When asked to rate their confidence that the sector will recover in the next 12 months (on a scale of one to 10, one being the least confident), the average response was just 5.37. This is only marginally better than the 4.78 average reported in 2010, when the market was much more volatile.
Mark Heald, head of PSD Group, explains that this year’s low figure is a result of recent events: “Things were looking relatively positive three months ago,” he says. “But it has all changed in a short period as a lot of developers are now sitting on their hands, looking to see what will happen in terms of the wider global economy.”
But look deeper into the numbers and it seems that not everyone is having such a hard time. In some parts of the UK - mainly in the South-east and in London, that fortunate “market within a market” - housebuilders are reporting higher salaries. Bonuses are being paid once again after a three-year hiatus, and people are starting to enquire about new positions, an indication that they are no longer too terrified to consider leaving their current role and company.
The key findings of the 2011 Housebuilder Salary survey show that some skills are still in demand, some jobs are still well paid and some regions are thriving. Here, we peer through the gloom to reveal who may be having a more lucrative year than most.
Where’s the money?
Looking first at basic salaries, a key determining factor in the size of your pay packet is where you live. Salaries in the South-east of England, which includes London, are higher than anywhere else in the UK. Here the average pay of a managing director is £158,000 compared with £125,000 in Yorkshire in the North-east, £120,000 in the North-west and £130,000 in the South-west. A technical director in the South-east earns, on average, £87,000 compared to £69,000 in Yorkshire and the North-east and £70,000 in the Midlands. Some of the biggest differences by region are among construction and build directors. While the average salary for this role in the South-east is £86,000, it is just £68,000 in the North-west and £69,000 in the South-west.
Salaries in the Midlands are, on average, the second highest in the UK with five out of the nine disciplines covered in the survey seeing salary increases. And in the South-west, salaries have increased in six out of the nine.
But it’s a dramatically different picture in the north of England. Yorkshire and the North-east reported static pay in every discipline and in the North-west just three out of the nine were on the up.
Looking at specific roles, it seems that the most fortunate person to be at this difficult time is a sales and marketing director in the South-east. Their basic salaries enjoyed the highest increase - up 9% from 2010. Managing directors across the board received a more modest boost of 3% (2.2% behind inflation).
Of course, for the lucky few, on top of the basic pay comes the bonus. After a nearly industry-wide freeze over the past three years, annual bonuses have now increased across the board, the survey found. Finance and technical directors came off the best with 12% increases. Design directors are next with an 11% rise in bonuses, and managing directors saw an average 8% increase.
Heald says: “There is plenty of evidence that bonuses are starting to be paid again as firms want to keep their staff from leaving to go to another firm that is offering better incentives. It’s a salary-related issue that, after several years, is now firmly back on the agenda.”
Taylor Wimpey’s Pilfold says: “We know that a number of firms haven’t been paying bonuses over the last few years and that this is changing now. Taylor Wimpey actually continued to pay them as we have more of an onus on incentives. But from watching what other firms are doing, there is definitely a more general move back towards paying them.”
Where’s the demand?
Technical stands out in the survey as an area of demand: 26% of respondents indicated this as the discipline with the biggest skills gap. This was followed closely by land and planning, which 22% indicated was the area they expected to need the most growth.
For those looking to increase their pay, a high-demand field can be a useful place to be. Elliot Course, principal consultant in property and construction for PSD Group, connects the high demand for technical professionals with the fact their annual bonuses have increased the most. He says: “This reinforces the findings of 2010 with developers replanning their existing land bank to adapt to buyer requirements.”
Heald adds that certain other skills are much sought-after by housebuilders at the moment: “We are tending to see, particularly in London, a high demand for project directors - people who will take projects from cradle to grave. And also development directors and managers. Firms are looking for people with skills and expertise in taking a project from acquisition through planning and design up to the stage of construction.”
He adds that, as highlighted by the survey results, roles in land and planning are particularly sought after ahead of 2012, as so many firms got rid of their land teams at the height of the financial collapse back in 2008/09, and now need to build them up again.
Taylor Wimpey’s Pilfold adds: “We will be opening more sites so we will be looking for more staff in the areas commonly linked to a recovering market - so commercial and technical.”
Market overview and outlook
It’s clearly still an uncertain market out there. Just 1% of individuals surveyed said they were entirely confident of a market recovery over the next 12 months. But this shouldn’t come as a shock considering the volatility of all sectors in the construction industry and the remaining problem for housebuilding of first-time buyers struggling to secure mortgages.
PSD’s Heald explains that while the outlook is not as bright as it seemed three months ago, all is not lost. “Most people who work in housebuilding are still in a position where they are relatively happy to have a job at all,” he says. “But the market is looking much better than it was three years ago. There is a bit of a hiatus at the moment but developers are now posted to start and restart programmes.
“The mortgage situation is getting better, in my opinion. If you go back two years there was just one provider willing to offer 95% mortgages to first-time buyers. Now there are more than 20.
“The fundamental point to make here is that the housing market will return. More people are living on their own, we have the oldest housing stock in Europe and it needs updating. Salaries are rising in some areas, bonuses are back and people are hiring again and growing their teams. Housebuilding will come back. It will just be a bumpy ride along the way.”