Table of Contents

Executive Summary

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TABLE OF CONTENTS

1. INTRODUCTION 6

2. SUMMARY 7

3. ECONOMIC ENVIRONMENT 10

3.1 INTEREST RATES 10

3.2 INFLATION 10

3.3 PUBLIC SPENDING, GDP AND UNEMPLOYMENT 11

4. CONSTRUCTION MARKET 12

5 THE HOUSEBUILDING MARKET 15

5.1 DEFINITION 15

5.2 MARKET SIZE 15

5.3 HOUSE PRICES 24

5.4 NEW BUILD MIX 26

5.5 MORTGAGES 29

5.6 HOUSING STOCK 31

6. THE HOUSEBUILDERS 39

6.1 DEFINITION 39

6.2 MIX OF HOUSEBUILDER GROUPS 39

6.3 NATIONAL HOUSEBUILDERS 41

6.4 REGIONAL COMPANIES 52

6.5 LOCAL COMPANIES 56

7. WINDOWS, DOORS & CONSERVATORIES 57

7.1 BACKGROUND 57

7.2 MARKET SIZE 57

7.3 FRAME MATERIALS 59

7.4 CONSERVATORIES 71

8. BUYING & SPECIFICATION PROCESS 75

8.1 SPECIFICATION PROCESS 75

8.2 SOURCE OF SUPPLY 77

8.3 PURCHASE & INSTALLATION 77

9. KEY MARKET INFLUENCES 79

9.1 INTEREST RATES AND INFLATION LEVELS 79

9.2 PDI AND SAVINGS RATIOS 80

9.3 POPULATION MIX 81

10. FUTURE PROSPECTS 83

LIST OF TABLES AND CHARTS

CHART 1: HOUSEBUILDING COMPLETIONS 1980-1997

CHART 2: VOLUME OF CONSTRUCTION OUTPUT GB - 1985-1996

TABLE 3: VALUE OF CONSTRUCTION ORDERS FOR NEW WORK IN GREAT BRITAIN 1985-1996 (£BN)

TABLE 4: HOUSEBUILDING COMPLETIONS IN GREAT BRITAIN (000') 1980-1997

CHART 5: MIX OF HOUSEHOLDS BY SECTOR percent

TABLE 6: UK HOUSEBUILDING STARTS (000'S DWELLINGS) 1986-1997

TABLE 7: HOUSEBUILDING STARS BY REGION

TABLE 8: VALUE OF HOUSEBUILDING OUTPUT AT CURRENT PRICES 1985-1999 £M

TABLE 9: AVERAGE NEW DWELLING PRICES PER REGION (£'000)

TABLE 10: MIX OF HOUSES/FLATS BY NUMBER OF BEDROOMS - 1976-1995 ENGLAND & WALES

TABLE 11: MIX OF HOUSES & FLATS BY NUMBER OF BEDROOMS BY TYPE OF BUILDER - 1986, 1991 & 1995 - ENGLAND & WALES

TABLE 12: BUILDING SOCIETY & BANKS VOLUME OF MORTGAGES UK 1986-1996 (NEW DWELLINGS ONLY)

TABLE 13: MORTGAGE ADVANCES BY BUILDING SOCIETIES BANKS/HOUSEBUILDING OUTPUT FOR PRIVATE SECTOR NEW HOUSING (£M)

TABLE 14: STOCK OF BUILDINGS IN GREAT BRITAIN - 1971-1996

TABLE 15: DEMOLITION / CLOSURE OF DWELLINGS IN GREAT BRITAIN 1979-1995

TABLE 16: AVERAGE NEW DWELLING LAND PRICES PER REGION (£'000 PER HECTARE)

TABLE 17: HOUSEHOLD TENURE DISTRIBUTION 1983-95

TABLE 18: AVERAGE HOUSEHOLD SIZE FOR GREAT BRITAIN 1971-1995

CHART 19: MIX OF STOCK OF DWELLINGS BY AGE - ENGLAND

CHART 20: MIX OF NATIONAL, REGIONAL & LOCAL HOUSEBUILDERS 1991 & 1996

TABLE 21: MARKET SHARES OF THE LEADING HOUSEBUILDERS IN THE UK 1996

TABLE 22: NEW HOUSING MARKET VOLUME OF WINDOWS & DOORS 1996

TABLE 23: FORECASTS OF VOLUME OF WINDOWS & DOORS IN NEW HOUSING 1996-1999

CHART 24: NEW HOUSING - WINDOW FRAME MATERIAL USAGE 1997

CHART 25: NEW HOUSING WINDOW FRAME MATERIALS 1995/1997

TABLE 26: HOUSEBUILDER SURVEY - WINDOW FRAME MATERIAL USAGE 1995/97

TABLE 27: CHANGES IN MATERIAL USAGE IN LAST 2 YEARS

TABLE 28: CHANGES ANTICIPATED IN MATERIAL USAGE IN NEXT 2 YEARS

CHART 29: NEW HOUSING - ENTRANCE DOOR FRAME MATERIAL USAGE 1997

CHART 30: NEW HOUSING ENTRANCE DOOR FRAME MATERIALS 1995/1997

TABLE 31: HOUSEBUILDERS SURVEY - ENTRANCE DOOR FRAME MATERIAL USAGE 1995/1997

CHART 32: NEW HOUSING - PATIO DOOR FRAME MATERIAL USAGE 1997

TABLE 33: HOUSEBUILDERS SURVEY - PATIO DOOR FRAME MATERIAL USAGE 1995-1997

TABLE 34: NEW HOUSING - CONSERVATORY MARKET

TABLE 35: CONSERVATORIES MARKET FRAME MATERIAL USAGE TOTAL MARKET/NEW HOUSING

TABLE 36: KEY INFLUENCERS IN SPECIFICATION OF FRAME MATERIAL

CHART 37: RESPONSIBILITY FOR INSTALLATION OF WINDOWS & DOORS

CHART 38: INTEREST RATES AND INFLATION (RPI) FROM 1990-2000

CHART 39: PDI & SAVINGS RATIO

TABLE 40: DISTRIBUTION OF UK RESIDENT POPULATION JUNE 1995

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EXECUTIVE SUMMARY

The new housing market represents a major application area for windows and doors. Over the last 5 years, there have been some major changes in terms of the structure of the market and the use of alternative frame materials.

After a very difficult period in the early 1990s, the level of completions experienced marginal recovery in 1993-95, before suffering a setback in 1996. Housing starts, however, have increased rapidly since late 1996, which will feed through into rising completion levels in late 1997/early 1998.

The housing market in general is currently more buoyant, partly stimulated by strongly rising house prices, at least in Southern England.

Housing Associations represent a substantial share of the new housing market, accounting for over 15 percent of completions, declining slightly in recent years as a result of government cutbacks in funding. Local Authorities are now only responsible for special needs housing, which currently represents less than 1 percent of total output.

The housebuilding market remains very fragmented with over 18,000 companies completing at least 1 unit. However, there has been further concentration at the large volume end of the market in recent years. Wimpey have recently acquired Tarmac's housing operation and are now clear market leaders with over 6 percent share. Other leading suppliers include Barratt, Persimmon, Beazer and Bellway, with the top 20 builders accounting for around 35 percent of total completions.

In terms of windows and doors, the major change in the market has been the growth of PVCu as a window framing material. Our 1995 report estimated PVCu accounted for 16 percent of windows in new housing which, by 1998 we estimate, will have increased to over 35 percent. Around 43 percent of respondents in our survey of larger builders indicated some change to PVCu in the last 2 years, with 41 percent stating there will be further change over the next 2 years. The switch to PVCu has been rapid among larger builders and is spreading through into smaller volume builders to such an extent that our forecast is that PVCu will be the dominant frame material within the next few years.

In the entrance door market, steel is growing rapidly at the expense of timber and now accounts for a substantial share of the market, offering benefits of durability, low maintenance and additional security.

Aluminium remains the dominant frame material in the patio doors market, but is declining primarily due to a switch to hinged French doors, which are generally installed in PVCu or timber.

Housebuilders are the dominant influence on the specification of frame materials, though Housing Associations also have an influence where appropriate. Indications from the survey indicate builders are more flexible in their specifications, testing different materials in different situations.

Traditional Builders Merchants and Joinery Specialists have lost share in supplying windows and doors in the new build market as a result of the growth of PVCu and steel specialists such as Anglian Tradeline, IG etc.

In the medium term, PVCu is forecast to show further growth. Several major builders, including Wimpey, have indicated their switch to 100 percent PVCu in private sector output, with many other leading national companies following this trend to a varying extent.

This comprehensive report represents a detailed assessment of the market, reviewing major trends, key factors influencing developments and future prospects for the sector. Analysis is both quantitative and qualitative, based on our substantial experience of the building and home improvement markets.

Text © 1998 AMA Research

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