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Archive for April, 2011

I realise that times have been and are still tough for most housebuilders and they have had to reign in and batten down the hatches (but they were hoisted by their own petard, see previous blogs), but they also seem to have put blinkers on and are burying themselves in the sand… a record number of sayings in one sentence here but they all do illustrate an industry that is shooting itself in the foot!

Britain is building the lowest number of homes since before the war; demand for new homes is at its highest since the war. Mortgages for first time buyers are difficult to say the least and some housebuilders are responding by building fewer homes for first time buyers and by building larger homes for those well established in the housing market.

Something has to give. I have a hunch that what will give is the desire from this and future generations to own a house (but maybe this will prevent more damaging, greed led, false economy, boom and busts in the housing market).

In Germany, which as we know has a much more stable economy than ours, and has a growing economy, home ownership is not a priority for most with only just over 40% owning. The rest rent from  a rental stock that on the whole is much  better maintained and presented than UK rental stock.  In the UK owner occupation has dropped in the past 5 years from over 70% to less than 68%.  A long way to go to reach German levels but with confidence in the housing market at a record low, with mortgages difficult to obtain, with unemployment fears and  with evidence that “having a good time” in terms of travel, eating and entertainment remains a priority and with housebuilders seemingly doing little to counter this trend we could well be in for a seismic shift in the industry.

The house building industry is going to need some wonderfully attractive product,  some clever ways of helping first time buyers and is going to need to be very smart indeed on all fronts if it is to not end up a shadow of its former self, and terminally so. They may come up with some novel financial model but few of them are capable of competing with Apple, Waitrose, Amazon and Last Minute for our money. Few of them understand design, few of them understand marketing. Few of them will ever recover from their current woes.

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