Gov want to build 1.5 million homes by the end of 2029. That's 4 years give or take. 375,000 per year in that period.
In 1968 at arguably the height of the last building boom, we built 416,000 new properties. Of which 226k were built by private firms, 9k housing association and 190k were local authority.
In 2023 we build 189,000 all in. 144k from private firms, 41k HA and 4k LA. and that's not a bad year compared to the last 10, maybe even since 2008.
Problem no1. Its not in private housebuilders interests to build more houses. It dilutes the market and lowers prices - reducing their lovely profit. To be honest, the UK's house builders aren't worth anything as a builder anyway - they don't have any of their own labour force, they are all management businesses who use sub contractors to get the dirty bit of building done. So I cant see them being either willing or able to step up to the plate and achieve these targets.
This could be got around by the Gov making their own development company or empowering LA's to get building again which is how it was in the glory days of 1968. But its a HUGE undertaking getting LA's building 4k properties nationwide!!! to step up to 375k next year and for the following 5 years!!!
Problem no2. Knowing the planning process, schemes of this size and quantity are going to take a couple of years to get through planning, essentially back loading the already steep targets to get to 1.5mil by 2029. Even if they reform the planning system as they rightly should - we aren't going to be building 375k next year. Material suppliers are also going to take some time to ramp up. Remember when all the brick kilns closed in 2009 and we struggled for the next 2 years getting bricks to build even a mediocre number of houses in 2011/2012.
Then we come to problem no3. The labour force - or lack of!
You aren't going to be able to train people fast enough to get them into the industry and productive to really make an impact, although it could help in the later 2028/29 years. So either as tradesmen we become so in demand that our prices can go through the roof. I'm talking big time boom! Cancel your holiday plans, sell that pickup and order yourself that Lambo 4x4 to drive around in - good times are coming baby!
Or more realistically we have another immigration push to bring a workforce in from somewhere else. The Irish did it back in the 50's and 60's, the Polish in the mid 00's. Sadly I think this will suppress our rates rather than raising them with the increased demand.
So when I initially heard about this plan, I thought, ok, could be good news for us in this game. But actually having thought it through, unless you do something that is super rare to find as a skill in other countries (like India or some African nations - they are most likely to be the source of the workforce) or be a manager!
Maybe I'm wrong on this? What do you think?
I am pondering investing in some shares in building material suppliers though - regardless of who is building these houses, they all stand to do quite well. Might be a smart investment?
www.theconstructionindex.co.uk
