It’s not exactly a page turner, nor something you read from cover to cover, but Fred Welling’s history of British Housebuilders in the 20th century has some fascinating insights into this very strange business.
One of the facts to emerge from his study is just how insular housebuilding is a sector of the economy. It has proven very difficult, verging on the impossible, for housebuilders to expand into other related areas, such as contracting or commercial property. And it’s proven just as difficult for other businesses to expand into housebuilding.
Furthermore, there is an almost total lack of overseas activity: only Taylor Woodrow and Wimpey (now merged into one) ever had significant businesses outside the UK. And conversely, there is an almost total absence of foreign takeovers within the quoted UK housebuilding sector.
With land supply being just a little restricted, the only way for housebuilders to expand their business is through acquisition. Yet Wellings looks at the question of the optimum size for a housebuilding operation and concludes that there is very little economic advantage in expansion, as the unit of production is essential a building site and the costs of running many building sites outweigh any savings in admin and overheads. He reckons the optimum size is around 500 units a year, about the amount a single manager is capable of handling.