AM26022

AMA RESEARCH Market Report : UK Housebuilding Market - Doors and Windows: October 2002

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Brief Description

AMA Research have published a report on "The Housebuilding Market 2002" - focusing specifically on Windows, Doors, Conservatories and Roofline Products. The report reviews developments in the new housing market and is based on a primary research programme of interviews with house builders throughout the UK.

Key areas in the report:-

Detailed assessment of the housebuilding market - housing starts & completions, analysis by sector (private/public), forecasts of future trends.

Review of Housebuilders - major builders, volumes, market shares, positioning.

Windows, Doors, and Conservatories - volumes analysis by material, growth of PVCu and composites, recent trends and future forecasts, factors influencing choice of materials.

Roofline Products - guttering, soffits, fascia and barge boards. Volume analysis by material, growth of PVCue, recent trends and future forecasts, factors influencing choice of materials.

Buying & Specification Process - review of factors influencing decision makers in the specification and buying processes, choices of material, sources of supply, purchase and installation responsibilities.

Database of the top UK housebuilders - Optional listing includes over 650 Head and Regional offices (see page 3 for details).

The report provides a comprehensive review of developments in the new housing market for doors, windows, conservatories and roofline products. The overall housing market has continued to evolve over the last decade with substantial changes to the mix between public and private sectors, the size and style of dwellings and specifications levels.

Executive Summary

The housebuilders market is a substantial end-user of a large number of building products including doors, windows and roofline products. Private sector housebuilding, in particular, has had a volatile history, with peaks and troughs in activity tending to mirror the general economic climate. However, the recent history of the housebuilding market has been that of a steady decline, despite the relative strength of the economy, with housebuilders concentrating on sustaining margins and quality of new homes rather than focusing on increasing completions.

Following moderate growth in housing completions during 1996 and 1997, the economic downturn of 1998 led to a decrease in the number of housing starts for that year, which in turn affected the completion levels for 1999. The public and registered social landlords (RSL's) sectors were also affected with a marked decline in the volume of housebuilding activity undertaken. During 2001, completions reached their lowest level since the mid 1920's with planning constraints again cited as a significant factor.

Private sector housing starts were expected to recover during 2000/01, which would have provided impetus for future completions levels. However, figures indicate that completion levels for the private sector showed only marginal increases during 2001, with 2002 completions also forecast to be relatively flat. For all sectors, housing completions are only expected to indicate moderate annual growth levels of approximately 3-4% over the next 3 years to reach an estimated 186,000 by 2005. However, factors including consumer confidence, interest rates, the limited availability of suitable land, increasing housing land prices, generally reported slowing down of the planning approvals process and increasing concentration on RMI (repair, maintenance and improvement) rather than new build work (particularly by the public sector), could all impact on overall completion levels.

During the last 4-5 years there has been an increased use of brownfield sites for new housing developments. Government emphasis on inner-city and urban regeneration has indicated that previously used land will have greater significance for new housebuilding in the future. In response to the urban regeneration programme a number of leading housebuilders have set up dedicated "inner city" divisions that are capable of providing all types of social and private sector dwellings on inner city sites.

The number of registered housebuilders during 2001 was approximately 15,400 but only an estimated 5,200 individual companies were involved with the building of one or more new houses, the remainder concentrating on RMI work. The increasing concentration of the housebuilders market has continued during 2000/01 with a greater proportion of companies now building in excess of 2000 houses per year.

In the past 3-4 years, the majority of the larger housebuilders have been increasing market share and national coverage through acquisitions and mergers, aided by the re-positioning of some of the larger construction companies away from housebuilding. In 2001, the top 20 national housebuilders accounted for just over 49% of total new housing completions, which is much higher than 10 years ago. The leading national housebuilders were Persimmon, George Wimpey and Barratt Developments, which together accounted for an estimated 21% of the market in terms of completions.

Throughout the past five years the leading national housebuilders have experienced consistent gains in market share, completions levels and profits and turnover. Levels of turnover and profits have improved during the time period to reflect this programme of expansion, with typical growth of over 100% in turnover and often over 150% growth in profits, directly attributable to housebuilding activities between 1997 and 2001.

The most significant developments in 2001 have been the consolidation of the national housebuilders. The flurry of consolidation activity was instigated by the announcement of the proposed merger between Beazer and Bryant during December 2000. However, the counter offer for Bryant from Taylor Woodrow during January 2001 ensured that the deal did not go ahead with Beazer finally accepting a take-over offer from rivals Persimmon. This was followed by Wilson Connolly acquiring Wainhomes in April 2001, and more significantly, George Wimpey acquiring Alfred McAlpine Homes in October 2001. The main result of these activities has been the emergence of a leading group of five companies who accounted for over 28% of the market in 2001. More recent activity has seen Redrow acquire Tay Homes.

The larger regional housebuilders have also been the subject of corporate activity with Galliford Try acquiring both Gerald Wood Homes and the Knapp Group during the year, whilst Kier acquired Allison Homes.

The use of pre-fabricated and factory finished building materials has increased during the last five years. Key factors underpinning this trend include the slowing down of the planning approvals process, the lack of available land for new housebuilding and perhaps most importantly, the significant skills shortages within the industry which have all led to increased pressure on available build time. Although the use of pre-fabricated products is still very much in the development stage, materials such as floor and wall panels, pre-assembled roofs, and bathroom pods are beginning to find niche sectors within the new housebuilding market. Pre-finishing of building products is also increasing with the use of push fit plumbing fittings, pre-plumbed water tanks, door and window sets and pre-finished joinery products.

The use of direct supply agreements for certain products such as doors and windows, has been extended within recent years. However, builders merchants remain a very significant and very important supply channel for the housebuilders market, with some manufacturers agreeing to supply products only through nominated merchants. Another major feature is the increased use of sub-contract installers and the use of "supply and fit" contracts that have led to a devolvement of the buying process away from the housebuilders.

The increasingly onerous legislative and industry standards have seen the use of approved supplier lists increase during the last 2-3 years. Technical specification has increased in importance and for many of the larger housebuilders, is now considered to be a head office function. The larger regional builders use either internal staff, external architects or specialist contractors for technical specification purposes.

The short-medium term future for the housebuilders market appears to be fairly optimistic with sustainable growth forecast for the next 2-3 years, though price levels are anticipated to level out.

With the recent increased focus on the sector, it is a distinct possibility that some of the smaller and medium-sized nationals could consider mergers or further acquisitions in order to maintain market position and defend their considerably improved performance of recent times.

Companies Mentioned

Persimmon, George Wimpey, Barratt Developments, Beazer, Bryant, Taylor, Woodrow, Wilson Connolly, Wainhomes, Alfred McAlpine Homes, Redrow, Tay Homes, Wilson Bowden, Bellway, Bovis Homes, Berkeley, Countryside Properties, Miller, J S Bloor, McCarthy & Stone, Crest Nicholson, Fairclough, John Laing, Prowting, Fairview, Walker Homes, Torwood Homes, John Mowlem Homes, Charles Church, McAlpine Homes, Greenham Trading, Greenham Construction, Prestoplan Purpose Built Ltd, Westbury plc, Larke Homes, John Maunders, Tay Homes plc, Manor Kingdom Developments, Thames Water plc, Thirlstone Group Ltd, Miller Group Ltd, J S Bloor Holdings Ltd, McCarthy & Stone plc, Crest Nicholson plc, Fairclough Homes Ltd, AMEC plc, Centex Development Company UK Ltd, Centex Corporation USA, General London Constructors Ltd, Hillsdown Holdings, Fairview Holdings plc, Prowting plc, John Laing plc, Octagon Developments Ltd, Beechcroft plc, Tay Homes plc, Galliford Try plc Stamford Homes, Midas Homes, A & J Stephen (Holdings) Ltd, Ben Bailey plc, Bett Brothers plc, Bewley Homes plc, Bowey Homes Ltd, Cala Group Ltd, Chartdale Ltd, Connolly Homes plc, Connolly Holdings plc, Croudace Ltd, David McLean Homes Ltd, David Payne Homes Ltd, Elite Homes Group, Furlong Homes Ltd, Goldcrest Homes plc, Haslam Homes Ltd, Henry Boot Homes, Hopkins Homes Ltd, Kendrick Homes Ltd, Kier Group plc, Allison Homes, Swallow Homes Ltd, Linden Group, McTaggart & Mickel, M J Gleeson Group plc, Morgan Sindall plc, Lovell Partnership, Wheatley Construction, Morris Group Ltd, AWG plc, Norfolk Homes, Dacerell Ltd, Pelham Homes Ltd, Rialto Homes plc, Scotia Homes, Shepherd Homes Ltd, Longden Homes, Sheperd Building Group, Swan Hill Homes Ltd, Swallow Homes Ltd, Spread Trustee Company Ltd, Telford Homes, Strata, Weaver Homes Ltd, Wates Homes Ltd, Wates Group, Yuill Group Ltd, Cecil M Yuill Ltd, Speedframe, Anglian Building Products, Anglian Windows Ltd.

List of Contents

1	INTRODUCTION
2	SUMMARY
3	ECONOMIC ENVIRONMENT
3.1	GENERAL
3.2	GDP GROWTH
3.3	INTEREST RATES & INFLATION
3.4	UNEMPLOYMENT
3.5	HOUSEHOLD CONSUMPTION, EARNINGS & SPENDING
3.6	STERLING
3.7	POPULATION PROFILE
3.8	AVERAGE SIZE OF HOUSEHOLDS
3.9	NEW HOUSEBUILDING SECTOR
4	CONSTRUCTION MARKET
5	THE NEW HOUSING MARKET
5.1	DEFINITION
5.2	MARKET SIZE
5.3	HOUSING STARTS
5.3.1	Overall Statistics
5.3.2	White Paper on Future Urban Regeneration
5.3.3	Statement by Rt Hon John Prescott MP
5.3.4	Regional Housebuilding Starts
5.4	HOUSING COMPLETIONS
5.4.1	Overall Figures
5.4.2	Private Sector
5.4.3	Public Sector
5.4.4	Registered Social Landlords (Housing Associations)
5.5	VALUE OF HOUSEBUILDING
5.6	HOUSE PRICES
5.6.1	Average Price of New Dwellings
5.6.2	Average Prices of All Dwellings
5.7	HOUSE-MOVING MARKET
5.7.1	Residential Property Transactions
5.7.2	Mortgages
5.8	HOUSING STOCK
5.8.1	Overall Housing Stock
5.8.2	Housing Land Prices
5.8.3	Household Tenure
5.8.4	Dwelling Stock By Age
6	THE HOUSEBUILDERS
6.1	DEFINITIONS
6.1.1	National Housebuilders
6.1.2	Larger Regional Housebuilders
6.1.3	Smaller Regional And Local Housebuilders
6.2	OVERALL MARKET
6.3	HOUSEBUILDERS MARKET SHARE
6.4	THE NATIONAL HOUSEBUILDERS
6.5	REGIONAL & LOCAL HOUSE BUILDERS
7	WINDOWS, DOORS AND CONSERVATORIES
7.1	BACKGROUND
7.2	MARKET SIZE
7.3	FRAME MATERIALS
7.3.1	Windows
7.3.2	Entrance Doors
7.3.3	Patio Doors
7.4	CONSERVATORIES
7.5	TRENDS
7.5.1	Standards And Regulations
7.5.2	Materials
7.5.3	Styles Of Windows And Doors
8	WINDOWS, DOORS AND CONSERVATORIES - BUYING AND SPECIFICATION PROCESS
8.1	SPECIFICATION PROCESS
8.1.1	Key Issues Affecting The Specification Processes
8.2	SOURCE OF SUPPLY AND PURCHASE
8.3	INSTALLATION
9	ROOFLINE PRODUCTS
9.1	BACKGROUND
9.2	MARKET SIZE
9.3	ROOFLINE MATERIALS
9.3.1	Guttering
9.3.2	Soffits
9.3.3	Fascia
9.3.4	Barge Board
10	ROOFLINE PRODUCTS - BUYING AND SPECIFICATION PROCESS
10.1	SPECIFICATION PROCESS
10.2	SOURCE OF SUPPLY AND PURCHASE
10.3	INSTALLATION
11	FUTURE PROSPECTS

Tables and Charts

Text © 2002 AMA Research

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Last updated by Amanda Porteous 2002