UK housebuilders: the key challenges and opportunities
The 2020s have been a roller coaster ride for UK housebuilders so far. The first year of the decade saw dramatic lockdowns which ground the sector to a halt. But shortly after, pent up demand and the stamp duty holiday led to bumper sales in 2020. Indeed, by the end of the year, house prices had surged by 7% compared to March.
British homebuilders have been affected in different ways by this turbulent period. For example, the largest volume builders – such as Barratt, Persimmon or Taylor Wimpey – are particularly concerned by labour shortages and regulations. Simultaneously, small independent home builders are preoccupied with planning processes.
At times of flux, it can be beneficial to step back and look at the bigger picture. Let’s explore the major challenges and opportunities facing UK housebuilders.
Looking forward: UK property development trends 2021
5 challenges for UK housebuilders
There are several interconnecting challenges facing house construction in the UK. Of course, the pandemic remains the most pervasive and widespread issue. But this is hardly unique to the construction sector. So, we have delved a little deeper to consider underlying issues.
Productivity and labour shortages
Low rates of productivity have long been a drag on the completion of new build houses in the UK. This certainly goes some way to explaining the decades-long failure to meet house construction targets.
Macro population changes
UK housebuilders are building a greater variety of homes than ever before. This is largely due to changing population dynamics. With people living longer, there’s greater demand for retirement homes that are designed to meet the needs of elderly people who require assisted living. At the other end of the market, younger people are living alone for longer. Modern family sizes also tend to be smaller. As a result, the mass production of ‘two up, two down’ homes is no longer the best strategy.
A challenging economic outlook
While 2020 was a good year for UK housebuilders, the market will likely cool down in 2021 and beyond. The stamp duty holiday meant that many people who planned to buy homes brought their purchases forward. Yet for people who have fared less well in the pandemic, buying a new home may feel more out of reach now than ever. As and when furlough schemes come to an end, we can expect high levels of unemployment and reduced demand for new build houses.
New regulations for home builders
Several new regulatory issues are coming down the line for UK housebuilders. One is the creation of the New Homes Ombudsman. Following complaints about the quality of some new build houses, the government’s ombudsman will enforce higher standards on the sector. The inquest into the Grenfell Tower tragedy has also revealed an urgent need to review processes surrounding safety and sign-off on materials and work completed. Housebuilders, along with other members of the construction industry, are being called on to develop the “Golden Thread” to ensure accountability and improve safety in completed builds.
At the same time, the government will continue to push the house construction industry to meet sustainability standards. Two-fifths of UK carbon emissions come from our housing stock. Homebuilders are already encouraged to make all properties as energy-efficient as possible and this pressure will only increase.
Learn more: Housebuilders, the environment and “eco-homes”
Last but not least, Brexit will inevitably lead to challenges for UK housebuilders. The country already has a shortage of construction workers, and many fear this could worsen as it becomes harder for EU nationals to relocate to the country. A combination of Brexit and the impacts of COVID-19 have already had an impact on the material supply chain. Industry bodies have reported higher costs for materials and delays in delivery, which have had severe impacts on housebuilders in 2021.
5 opportunities for UK housebuilders
While it’s important to be aware of the challenges, surveys show that many British house construction firms are optimistic about the sector’s outlook. Let’s look at some of the key opportunities that will emerge in the coming years.
New construction techniques
In recent years we’ve seen some incredible innovations in construction technology. And these new approaches are being more widely adopted. This includes things like 3D printing, modular construction, BIM and other new tools and technologies. These methods should help boost productivity and may also go some way to compensate for any labour shortages.
Easier planning process
At the time of writing, the government is continuing its consultation into a major upheaval of the planning process. The approach is expected to make it much easier to develop new build houses, using technology to fast track the process and push local authorities to build more homes.
The digital revolution
After a slow start in the industry, UK housebuilders are now increasingly using digital technologies. Software for housebuilders supports every stage of construction, from drawing BIM models, to managing projects, assigning tasks, resolving defects and overseeing handovers. These digital tools can make home builders much more efficient by saving time and improving how they run projects. They can also help housebuilders to meet new health, safety and quality requirements by standardising processes and making documentation easier to produce and store.
If there’s one thing that can give UK housebuilders confidence, it’s backing from the government. With a mantra to ‘build, build, build’ back from the coronavirus pandemic, home builders have received a strong signal of support. While the government’s major construction projects are set to focus on infrastructure, this should open up new opportunities in more regions.
New markets opening up
One consequence of the pandemic is the emergence of demand for new kinds of homes. As has been widely reported, the rise of home working means that many workers are looking to purchase larger properties away from cities. This could give a boost to small housebuilders. There is also the changing nature of high streets and city centres and what this means for the sector. Some offices, pubs, restaurants and shops are will never reopen after the pandemic. There is likely to be a boom in conversions of these spaces into desirable flats.
The bigger picture for British home builders
As the dust begins to settle after the tumultuous first year of the decade, there are plenty of reasons for UK housebuilders to be optimistic. Indeed, many of the challenges we have identified have positive elements too. They may well encourage the sector to become leaner, more innovative and efficient.
At PlanRadar, our goal is to help house construction firms improve how they work through digitisation. Our user-friendly mobile app lets you manage projects end-to-end and benefit from the speed and efficiency of technology.