Today sees the launch of a pro-housebuilding lobby document called Mind The Gap. It’s authors are David Pretty, once MD at Barratt, and Paul Hackett, acting head of the Smith Institute, a left leaning think tank set up in honour of John Smith.
It’s a concise 30 page review of the UK housing scene, well thought out and covering most of the topical areas for discussion. Including a paragraph promoting self build:
The Government could also offer more support (perhaps in the form of tax breaks and subsidised land) to the self-build market, which is much less developed than in earlier decades or in Northern Europe. The average loan-to-value ratio for self-builders is low and there are few defaults, which should make the sector attractive to lenders. Self-build production has steadily risen, according to unofficial estimates, to around 10% of the UK housing market, with the strongest growth in rural areas. Although the recession has reduced activity, organisations like the National Self Build Association believe that, with the right mix of incentives, production of self-build could be increased to over 40,000 homes (mostly detached).
There is also an insightful little table showing Government housing initiatives since 2008. I don’t know why I find this stuff fascinating, but it is, and it’s great to see it all in one place. There are ten initiatives here, all designed to prop up the housing market and at least six of them are specifically aimed at keeping house prices high, or at least to stop them falling through the floor.
●National Affordable Housing Programme –£8.4billion to increase the supply of all affordable homes (2008-11).
●Housing Pledge –£1.5billion to support existing programmes, including £350million to buy unsold stock and £400million brought forward for affordable housing.
●Kickstart –£1.06billion package to deliver 22,000 homes over two years, of which 8,600 will be directly supported affordable homes. 270 bids shortlisted.
●Community Infrastructure Fund –£100million for the Thames Gateway and £200million for the Growth Areas and Growth Points to support housing developments.
●HomeBuy Direct –£300million shared-equity scheme to help first-time buyers purchase their newly built properties.
●Housing Private Finance Initiative (Round 6) – £1.7billion PFI credits for ten councils to deliver 4,500 new or improved council homes as well as 1,600 new affordable rented homes.
●Housing Market Renewal Pathfinder Areas – £35million extra funding.
●Eco-towns – four new settlements to provide 10,000 new homes by 2016, of which 30% are to be affordable homes.
●Mortgage support –includes the £44million Homeowners Mortgage
Support scheme and the £280million Mortgage Rescue Scheme.
●Stamp Duty holiday –on properties costing less than £175,000 (until the end of 2009).
The Gap in question in the title is the old chestnut of rising demand versus falling supply. It’s funny how 95% of the analysis goes into the supply side and only 5% into the demand. That’s because the demand figures are so flakey that no one dare really look into them. All they really do is to project past trends into the future; because we have lots more single households forming and lots of immigration over the past twenty years, it is just assumed that this will carry on. It’s all so very Soviet: five, or in this case, 15 year plans for population growth and household formation.
Where this disconnects from reality is that we have a little problem with carbon emissions and resource depletion. Common sense tells us that one of the prime ways to solve this problem is to stop adding to it and start repairing what we already have. And to admit that we cannot go on building endless new homes until everyone lives in one on their own, or half of Eastern Europe has moved to the UK.
If we want to make houses more affordable, then it’s time we started taxing the profits people make on them. But let’s give up this pretence that the answer lies in having another building boom.
The foreword of the report states: Few would now argue that the prospect of a large and growing shortfall in housing supply can be ignored any longer. To look away is not a realistic option. The evidence of a widening gap between housing production and demand is undeniable.
Well, I hereby nail my colours to the mast and say I am one of the few. I think that what has happened to the housing market in the past two years makes a mockery of these statements. If there really was a large and growing shortfall in housing supply, then it would be impossible for house prices to drop. Yet drop they have. I would say that this is evidence that demand for housing has very little to do with production levels, and an awful lot to do with possible investment returns.
29 Sept 2009
21 Sept 2009
UK SIPS Association
Last week I made it across to Birmingham's Think Tank to take part in the launch event of the UK SIPS Association. SIPS as a building system has been around in the UK for nearly ten years and elsewhere, notably the States, for much longer. However, nowhere has it ever taken off and become mainstream and if you've wanted to build in SIPS you have had to deal with one of a small number of specialists dotted around the country.
Time for the SIPS industry to promote itself a little more effectively. The question for the SIPS boys (and they are almost all boys) was whether to tag along with the UK Timber Frame Association or to branch out on their own? It's not an easy call, because there are many similarities between the build systems and there are also hybrid walling systems around which are not easy to identify as either SIPS or Timber Frame. Google Supawall if you want to see what I'm on about. Largely at the prompting of John Tebbitt of the Construction Products Association, SIPS have decided to strike out on their own, hence this event.
Doubtless it will be the start of a long journey. SIPS doesn't have anything like a Quality mark or a generic type approval, so each individual system (and they all seem to vary a little) has to proceed down the lengthy and expensive path of 3rd party certification: not surprisingly, the BBA were there, in the shape of Alan Thomas, suggesting what a good idea this was, but I have my doubts. SIPS are inherently strong and if put together properly should be more than adequate for any low rise building, and the risks from fire and flood seems to be identical to conventional timber frame, which is no longer expected to prove itself fit for purpose because its been around so long.
Another issue facing SIPS is the perceived premium price. Just how much more expensive than blockwork or timber frame is hard to say, because its not a commodity product which can be easily costed on a spreadsheet line by line. Instead quotes are done on a supply and fix basis. It seems that SIPS are likely to be more cost effective when the roof is being utilised as living space, but to date most SIPS customers have been primarily interest in energy saving, not cost reduction.
The one company that perhaps gives the lie to this is Custom Homes who, back in 2006, started offering their houses in SIPS versions instead of conventional timber frame. As they didn't charge any extra for SIPS, their customers switched en masse to SIPS and now they do SIPS almost exclusively. That would seem to suggest that even if SIPS are more expensive, the cost differential is so small that it's meaningless. There is of course a lot of hope that code changes will make other systems comparatively more expensive and that over time SIPS may become cheaper than anything else, but that in turn may cause a whole new set of problems as big producers suddenly muscle in on the scene, pushing out the niche suppliers. But that's a worry for another day.
Bill Wachtler of the US equivalent body, SIPA, gave a 20 minute presentation on the American experience. SIPS there remain a premium product, accounting for less than 1% of the residential newbuild market and last year they completed no more than about 6,000 SIPS homes, down from 10,000 in 2007. That may sound bad, but then he showed a slide showing how US housing starts had deteriorated in general: from 1.7 million new homes in 2007 down to an estimated 450,000 this year. That's a 75% reduction. In the UK, the equivalent figure shows a mere 60% reduction. Even so, that's some downturn. It's a wonder that everyone remains so optimistic.
By the way, as a budding reporter on the SIPS scene in the UK, I can’t be the only one to be confused by the similarities of many of the names. So here, for my benefit as much as anyone elses, is a bluffer’s guide to the SIPS scene.
• Kingspan Tek System: now just a supplier of PUR SIPS from Germany, used by a number of installers (formerly process partners), notably SIPS of CLAY in the selfbuild sector
• SBS Building Systems, makes PUR panels in Widnes and supplies SIP It Scotland, SIP Build in the North and Built It Green in the South.
• SIPS UK, aka SIPTEC, is the business started by Tony Palmer in Northamptonshire but now mostly concentrating on overseas markets. SIPHouse is their current manifestation in the UK market, but they no longer manufacture here.
• SIPS Industries, formerly BPAC, is the Fife based manufacturer and installer of EPS panels, run by Charles Stewart.
• SIPS EcoPanels is the SIPS offshoot of Custom Homes (closely related, but independent from). The panels are EPS-based and made in Scotland. Contact is Peter Keogh.
• Hemsec produce PUR SIPS on Merseyside, but aren’t really in the selfbuild market. Main man is Richard Daley.
• Innovare Systems, based in Coventry, are in the social housing market mostly, and seem to be part of the Osborne Group. Main man Andrew Orriss, now chair of the UK SIPS Association.
Have I forgotten anyone? Or got something wrong? And why is it that Scotland makes EPS panels and England PUR?
Time for the SIPS industry to promote itself a little more effectively. The question for the SIPS boys (and they are almost all boys) was whether to tag along with the UK Timber Frame Association or to branch out on their own? It's not an easy call, because there are many similarities between the build systems and there are also hybrid walling systems around which are not easy to identify as either SIPS or Timber Frame. Google Supawall if you want to see what I'm on about. Largely at the prompting of John Tebbitt of the Construction Products Association, SIPS have decided to strike out on their own, hence this event.
Doubtless it will be the start of a long journey. SIPS doesn't have anything like a Quality mark or a generic type approval, so each individual system (and they all seem to vary a little) has to proceed down the lengthy and expensive path of 3rd party certification: not surprisingly, the BBA were there, in the shape of Alan Thomas, suggesting what a good idea this was, but I have my doubts. SIPS are inherently strong and if put together properly should be more than adequate for any low rise building, and the risks from fire and flood seems to be identical to conventional timber frame, which is no longer expected to prove itself fit for purpose because its been around so long.
Another issue facing SIPS is the perceived premium price. Just how much more expensive than blockwork or timber frame is hard to say, because its not a commodity product which can be easily costed on a spreadsheet line by line. Instead quotes are done on a supply and fix basis. It seems that SIPS are likely to be more cost effective when the roof is being utilised as living space, but to date most SIPS customers have been primarily interest in energy saving, not cost reduction.
The one company that perhaps gives the lie to this is Custom Homes who, back in 2006, started offering their houses in SIPS versions instead of conventional timber frame. As they didn't charge any extra for SIPS, their customers switched en masse to SIPS and now they do SIPS almost exclusively. That would seem to suggest that even if SIPS are more expensive, the cost differential is so small that it's meaningless. There is of course a lot of hope that code changes will make other systems comparatively more expensive and that over time SIPS may become cheaper than anything else, but that in turn may cause a whole new set of problems as big producers suddenly muscle in on the scene, pushing out the niche suppliers. But that's a worry for another day.
Bill Wachtler of the US equivalent body, SIPA, gave a 20 minute presentation on the American experience. SIPS there remain a premium product, accounting for less than 1% of the residential newbuild market and last year they completed no more than about 6,000 SIPS homes, down from 10,000 in 2007. That may sound bad, but then he showed a slide showing how US housing starts had deteriorated in general: from 1.7 million new homes in 2007 down to an estimated 450,000 this year. That's a 75% reduction. In the UK, the equivalent figure shows a mere 60% reduction. Even so, that's some downturn. It's a wonder that everyone remains so optimistic.
By the way, as a budding reporter on the SIPS scene in the UK, I can’t be the only one to be confused by the similarities of many of the names. So here, for my benefit as much as anyone elses, is a bluffer’s guide to the SIPS scene.
• Kingspan Tek System: now just a supplier of PUR SIPS from Germany, used by a number of installers (formerly process partners), notably SIPS of CLAY in the selfbuild sector
• SBS Building Systems, makes PUR panels in Widnes and supplies SIP It Scotland, SIP Build in the North and Built It Green in the South.
• SIPS UK, aka SIPTEC, is the business started by Tony Palmer in Northamptonshire but now mostly concentrating on overseas markets. SIPHouse is their current manifestation in the UK market, but they no longer manufacture here.
• SIPS Industries, formerly BPAC, is the Fife based manufacturer and installer of EPS panels, run by Charles Stewart.
• SIPS EcoPanels is the SIPS offshoot of Custom Homes (closely related, but independent from). The panels are EPS-based and made in Scotland. Contact is Peter Keogh.
• Hemsec produce PUR SIPS on Merseyside, but aren’t really in the selfbuild market. Main man is Richard Daley.
• Innovare Systems, based in Coventry, are in the social housing market mostly, and seem to be part of the Osborne Group. Main man Andrew Orriss, now chair of the UK SIPS Association.
Have I forgotten anyone? Or got something wrong? And why is it that Scotland makes EPS panels and England PUR?
25 Aug 2009
Eco Bollocks Award: The Living Wall
Back in June when I visited the BRE Onsite exhibition, I saw not one, but three examples of Green or Living Walls on display. Having never seen one before anywhere, I was immediately suspicious. Here are some of the photos I took.
For those remaining in blissful ignorance, a living wall is an upmarket version of a trellis with clematis or honeysuckle growing over it. Instead of a few slats of timber, you have to create a stainless steel grid screwed or bolted onto the façade. And instead of a bit of judicious watering of an evening during dry spells, these living walls come supplied with their own self-irrigating systems.OK, it’s not exactly designed for the domestic market, but it does sort of strike you as an invention the world really doesn’t need.
But I didn’t think anything more about it until alerted this morning to this story which appeared in the Evening Standard about a living wall in Islington that’s gone kaput and is now a dead wall. Because the irrigation system didn’t work. How surprising is that?So I thought it would be a good time to offer it an Eco Bollocks Award. Haven’t done one for a while and this seems to me to be a pearl.
21 Aug 2009
Should Barratt be rescued?
Rumours in the City have it that Barratt will soon be coming cap in hand with a rights issue. It wants to be baled out of its debt mountain. If it happens, then expect a flurry of activity from the other quoted housebuilders who, with the notable exception of Berkeley, all seem to be sinking in debt that they can’t service. They are all waiting on an upturn in the housing market to enable them to get back to business as usual, get building and start raking in the profits once more.
If Barratt was a single householder, it would have been repossessed by now. “Behind on the mortgage payments, are we? Well, you’ve got two weeks to get out.”
But of course the UK housebuilders are collectively too large to be repossessed, so the banks don’t dare pull the plug. For a start, there would be almost no one around to snap up all the land which would be sold off, and this would put further downward pressure on prices, which the banks fear as much as anyone.
But what if the fabled upturn fails to materialise? What if the way things are now is how it’s going to be from now on? Maybe this is what a stable housing market looks and feels like? Instead of forever looking for signs of whether house prices are going up or down, just accepting the fact that they really don’t change that much from year-to-year and learning to live with the consequences.
One of which would be that we wouldn’t need cash-hungry housebuilders anymore.
If Barratt was a single householder, it would have been repossessed by now. “Behind on the mortgage payments, are we? Well, you’ve got two weeks to get out.”
But of course the UK housebuilders are collectively too large to be repossessed, so the banks don’t dare pull the plug. For a start, there would be almost no one around to snap up all the land which would be sold off, and this would put further downward pressure on prices, which the banks fear as much as anyone.
But what if the fabled upturn fails to materialise? What if the way things are now is how it’s going to be from now on? Maybe this is what a stable housing market looks and feels like? Instead of forever looking for signs of whether house prices are going up or down, just accepting the fact that they really don’t change that much from year-to-year and learning to live with the consequences.
One of which would be that we wouldn’t need cash-hungry housebuilders anymore.
11 Aug 2009
New Homes Too Small
News that CABE has found that new homes are too small will come as a surprise to no one at all. We’ve long known that the UK builds the smallest new homes in Europe. As there are no minimum space standards set out in the building regs or the planning conditions, why on Earth would we expect anything else?
And unlike the terraced homes that the Victorians built (which were also too small), there is no obvious way of improving the new homes we are now building.
The really uncomfortable question isn’t being asked here by CABE. Which is: were these small homes being built to satisfy a genuine need or were they a credit-fuelled gamble on rising house prices?
Or to put it another way, it didn’t matter that the bottom rung of the housing ladder was so small that you couldn’t actually get your foot on it, just so long as it was there.
And unlike the terraced homes that the Victorians built (which were also too small), there is no obvious way of improving the new homes we are now building.
The really uncomfortable question isn’t being asked here by CABE. Which is: were these small homes being built to satisfy a genuine need or were they a credit-fuelled gamble on rising house prices?
Or to put it another way, it didn’t matter that the bottom rung of the housing ladder was so small that you couldn’t actually get your foot on it, just so long as it was there.
13 Jul 2009
Prince Charles v Whitehall
I watched Prince Charles’s Dimbleby lecture last Thursday. In it, he argued that economic growth had hit the buffers and that the future lay in sustainable development. Nothing new there; it’s standard green thinking.
However, it seems to have hit a raw nerve in the rest of the Establishment. Yesterday, the Times carried reports from “senior Whitehall sources” saying basically that the Prince was misguided and that his vision was fatuous. The question is, why should a senior Whitehall source be minded to offer up this stuff to the Times?
The Whitehall growth monkey has some very strange observations to make.
“Within its core, represented strongly in organisations such as Friends of the Earth and Greenpeace, environmentalism still has an ideological greenness that does not like the way we live and does not believe this is what creates fundamentally decent society. That continues to infect the way they think about the changes that we need, so in that sense it is fundamentally wrong.”
Look at the way he uses the word “infect?” Is he worried, or what?
He goes on: “We are aiming to cut emissions by a third in the next 10 years and then by 80% in the next four decades. These things are not happening because the population has had a green psychological transformation,” he said.
“If that were true, we’d never get anywhere, we’d never have got rid of slavery or brought in seatbelts or abolished hanging. No social change is force-driven by mass psychological change. It is about government leading and people changing accordingly.”
Is he right? Reading between the lines I think he’s hinting that the Metropolitan Elite fashion and the proles are then corralled into changing their behaviour. He could have mentioned the ban on smoking in public places as a more recent example. But what if the Metropolitan Elite decides that we can’t go on pursuing endless economic growth because it’s fucking up the environment? What would the Whitehall mandarins do then? Or do the Whitehall mandarins somehow control the Metropolitan Elite, and hence the government?
Everybody knows that green living involves a bit of hair-shirting, but then so does having a recession every ten or twenty years. The reason the green arguments have such resonance at the moment is that the orthodoxy of economic-growth-at-all-costs has imploded and is failing to deliver the promised goods.
And I think the reason Whitehall is worried this time is because the government finances are in such a mess that a return to economic growth is the only way they can be baled out, and even then it will take 20 years or more. But what if economic growth refuses to come back? What if we have hit the buffers this time?
However, it seems to have hit a raw nerve in the rest of the Establishment. Yesterday, the Times carried reports from “senior Whitehall sources” saying basically that the Prince was misguided and that his vision was fatuous. The question is, why should a senior Whitehall source be minded to offer up this stuff to the Times?
The Whitehall growth monkey has some very strange observations to make.
“Within its core, represented strongly in organisations such as Friends of the Earth and Greenpeace, environmentalism still has an ideological greenness that does not like the way we live and does not believe this is what creates fundamentally decent society. That continues to infect the way they think about the changes that we need, so in that sense it is fundamentally wrong.”
Look at the way he uses the word “infect?” Is he worried, or what?
He goes on: “We are aiming to cut emissions by a third in the next 10 years and then by 80% in the next four decades. These things are not happening because the population has had a green psychological transformation,” he said.
“If that were true, we’d never get anywhere, we’d never have got rid of slavery or brought in seatbelts or abolished hanging. No social change is force-driven by mass psychological change. It is about government leading and people changing accordingly.”
Is he right? Reading between the lines I think he’s hinting that the Metropolitan Elite fashion and the proles are then corralled into changing their behaviour. He could have mentioned the ban on smoking in public places as a more recent example. But what if the Metropolitan Elite decides that we can’t go on pursuing endless economic growth because it’s fucking up the environment? What would the Whitehall mandarins do then? Or do the Whitehall mandarins somehow control the Metropolitan Elite, and hence the government?
Everybody knows that green living involves a bit of hair-shirting, but then so does having a recession every ten or twenty years. The reason the green arguments have such resonance at the moment is that the orthodoxy of economic-growth-at-all-costs has imploded and is failing to deliver the promised goods.
And I think the reason Whitehall is worried this time is because the government finances are in such a mess that a return to economic growth is the only way they can be baled out, and even then it will take 20 years or more. But what if economic growth refuses to come back? What if we have hit the buffers this time?
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