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The new housing market represents a major application area for kitchen furniture and appliances and has experienced some major changes in recent years in terms of market structure, size and changes in attitude towards the installation of kitchen products.
Following 4 years of decline in the early 1990s, new housing completions recovered marginally in 1993/94, though low confidence levels and the lack of the 'feel good factor' are limiting further growth. 1995 has proved to be disappointing, with completions declining rapidly in the second half of the year.
A major area of change has been the growing influence of Housing Associations which by 1994 accounted for almost 20 percent of new homes, compared with only 10 percent in 1991. Housing Associations have rapidly taken over the responsibility for social housing requirements from Local Authorities where new housing developments are now less than 2000 units per annum.
The largest 10 Housing Associations all have 1500+ new homes under development, with North British Housing Association the largest with over 6000 properties under development.
The housebuilding market is very fragmented with around 20,000 companies involved in building one or more houses. At the top end of the market there is increasing market concentration, though the 15 largest housebuilders still account for less than 25 percent of total completions.
Wimpey, Tarmac, Barratt and Beazer are the leading housebuilding companies, averaging 3-4 percent each of the market though, major re-structuring in the market is taking place with Wimpey and Trafalgar (Ideal) both announcing their withdrawal from the housing sector.
The UK Kitchen Furniture market is worth over £700 million at manufacturers prices, with the new build sector accounting for an estimated 16 percent of total demand. The vast majority of new houses now have a fitted kitchen installed as standard, even for relatively low-value starter homes.
A fitted kitchen is one of the major selling points for new homes. Quality standards have improved significantly as buyers are often "experienced users" and are therefore more critical in terms of design, style, space utilisation etc. than, perhaps, 10-15 years ago when household ownership levels of fitted kitchens were much lower.
The UK Kitchen Appliance market is estimated at £1.3 billion, though the new build market is of much lower relative importance at around £60m. The main exception is build-in ovens, hobs and hoods, where the sector accounts for 25-30 percent of total sales.
Dishwashers are widely specified in the new build market, but refrigeration and laundry products account for a very small share of their respective markets.
In the private sector, the housebuilder retains prime responsibility for the specification and choice of supplier of both furniture and appliances. The general area of exception to this is in terms of furniture style/colour options or choice of additional appliances where the housebuyer can specify. This choice, however, is generally only available where the decision to purchase the house is finalised sufficiently early in the building process to allow the builder to meet individual customer requirements.
In the Housing Association sector the process is different, with larger Associations in particular establishing their own specification either themselves or with the cooperation of the housebuilder on 'design and build' contracts. Smaller Associations are more likely to depend on the housebuilder to draw up standard specifications.
The majority of housebuilders will source ready-assembled rigid furniture, rather than flat-packs, for ease of installation and source direct from manufacturers (54 percent), Builders Merchants (32 percent) or Kitchen Distributors (12 percent). Kitchen furniture manufacturers are also a growing source of installation support for many housebuilders, often in conjunction with their staff or other sub-contractors.
Kitchen distributors are a much more important source of supply for appliances, accounting for around 70 percent of the market, due to the much wider range in specification of type and volume of appliances, even within individual building sites.
A key trend in recent years is the development towards builders sourcing a coordinated package of furniture and appliances, with manufacturers and distributors offering a full package which may also include installation.
The downturn in new housing activity in the early 1990s has had varying impacts on Kitchen equipment, with some appliances experiencing a decline in sales as builders seek to reduce overall costs. However, furniture standards have improved and a combination of market recovery and higher customer expectations should lead to a recovery in the total market in the longer term.
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 © 1996 AMA Research
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Last updated by Duncan Nottage 1st February 1999