The New Testament

In November 2011, the Government published its ‘Housing Strategy’, which consisted of measures designed to get the housebuilding scene back on its feet. Self-build got a prominent role — the first time it has ever been taken seriously as policy.

The reason for this change in policy direction can be neatly summed up by a bar chart (below) which appears in the report. It highlights one big fat point — in most western nations self-build accounts for just over half of all new homes, while in the UK the figure is just 15% according to the graph and probably now under 10%.

Now, I think this bar chart has had a pretty dramatic effect on ministers and civil servants. In fact, I know it has, which is why it’s been given prominence in their report. Study it for a minute and you can’t help but think, ‘Here is a wide range of countries with, in general, higher levels of housebuilding than us and, in general, more stable house prices. How can we get in on the action?’

But every good bar chart tells a story and this one is no exception. Because what’s even more remarkable about the UK’s new homes scene is the high number of houses built speculatively by the likes of Barratt, Taylor Wimpey and Persimmon — they account for the vast bulk of the 85% of homes that aren’t classified as self-build on the chart. Big housebuilding companies like these barely exist in the other nations — the fact that our housing industry is still dominated by them is what is exceptional. After years of consolidation, we still have eight housebuilding companies, and the sector has never experienced a successful foreign takeover. Speculative housebuilding is a peculiarly British business.

So, what accounts for this difference? Let’s take Germany by way of contrast. The bar chart suggests that just over 60% of new German homes are ‘self-built’. I use this term loosely because most are not self-built in quite the way we have come to understand it. The whole process is just plain different. You decide you’d like to live in a particular town or village and you’d like to build a home. Well, for a start, there are always plots available because every settlement brings a steady stream of individual plots forward for development. Yes, it’s low density, yes, it may be outside the existing settlement area, but these issues which are such political hot potatoes in the UK just don’t cause so much as a ripple in, say, the state of Baden-Württemberg.

What they don’t have in Baden-Württemberg are new housing estates with flagpoles announcing their wares. Instead of visiting a show house on site, you are encouraged to visit one located at the factory of your chosen housebuilder, or at a permanent exhibition centre where you can compare the output of one housebuilder with another. Now that is competition! At this stage you choose your housebuilder, select a design, arrange finance, and then stand back and wait three or four months until your home is complete and you can move in. It’s that easy. But is it self-build?

Now, there are UK-style self-builders in Baden-Württemberg too — those who may live on site in a caravan and spend a year to 18 months organising materials and subcontractors as they seek to get a little more for a little less. But they’re a small minority; probably fewer than here in the UK. The majority of German self-builders sit back and let their housebuilding company take care of everything.

Which brings us back to that bar chart. For the uncomfortable truth is that for UK self-build to really grow we need to have a housebuilding industry which operates akin to Germany’s. And to do this, we need to understand that our habit of building most homes speculatively for sale is distinctly unusual and arguably very uncompetitive.

We could double or treble self-build in this country, but I think it would have to be instead of, rather than as well as, the spec-built homes we produce. Most HB&R readers may relish this, but I’m not sure our politicians have quite taken it on board yet. I think they’re rather hoping that the self-build sector will somehow flourish on its own and won’t impact on anything else. But the promotion of self-build is essentially about shifting the market in favour of quality and choice. It’s not a numbers game.