| KN45033 |
| KEY NOTE HOUSEBUILDING : June 2003 |
 |
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This report covers: housebuilding, skills shortage, product development, technological changes, E-Commerce and the role of the internet, international markets, the Euro, political influences, land shortaages, helath and safety, private sector, public sector, single occupancy, housing shortage, prefabrication, innovation,
Companies covered include: Taylor Woodrow, Persimmon, Barratt Developments, George Wimpey, Kier Group, Berkeley Group, Wilson Bowden, Wilson Connolly Holdings, Bellway, Redrow, Westbury,
EXECUTIVE SUMMARY
| In 2002, the UK housebuilding market produced a total output worth £31.24bn, accounting for 37.4 percent of the total output of the construction industry as a whole. Strong growth was recorded at 12.2 percent between 2001 and 2002. Not only is the UK's housebuilding market vital to those that it employs and the ancillary industries that supply it, it is also of major importance to British home buyers, who see their home as a key investment. |
| The housebuilding market comprises four distinct sectors: the public sector; the private sector; and, within each, a new work sector and a repair, maintenance and improvement (RMI) sector. Private sector new work and private sector RMI have registered the largest increases in output since 1997, although public sector new work has also seen significant gains following the transfer of public sector housing stock to housing associations. |
| A number of economic factors have converged to produce very rapid, high growth in the private housing sector. Low levels of unemployment, an undersupply of housing, low interest rates and poor returns on savings, stocks and shares are fuelling demand for housing, both new and secondhand. Housing associations, which operate in the public sector, have also been developing additional public sector housing and maximising the opportunity to borrow money at low interest rates in order to fund developments. |
| Although growth in the private new work sector has been strong in terms of output, the actual level of housing completions is too low to meet demand. This sector is highly constrained by a lack of suitable land for residential building. The private RMI market has also benefited from the housing boom, both by sellers renovating properties prior to sale and buyers putting their stamp on their new homes. The public sector has benefited from the new build initiatives of many housing associations, but the RMI sector has also been benefiting from a government programme to renovate council housing. |
| There are concerns that the housing market has reached capacity and that house prices in certain regions will fall. This is most likely to occur in the regions where the price rises have been most dramatic. On the whole, if interest rates continue to remain low, prospects for the housebuilding market should remain positive over the coming years. |
TABLE OF CONTENTS
| Executive Summary 1 |
| 1. Market Definition 8 |
| REPORT COVERAGE 8 |
| Definitions 8 |
| Types of Dwelling 8 |
| Private Enterprise 8 |
| Registered Social Landlords 8 |
| Local Authorities 8 |
| Social and Affordable Housing 9 |
| Stages of Construction 9 |
| MARKET SECTORS 9 |
| Private Sector 9 |
| Public Sector 9 |
| MARKET TRENDS 9 |
| Housing Shortage 9 |
| Single Occupancy 10 |
| Prefabrication and Innovation 10 |
| Planning and Land Use 10 |
| ECONOMIC TRENDS 10 |
| Population 10 |
| Table 1: UK Resident Population by Sex (000 and percent), Mid-Years 1998-2002 11 |
| Gross Domestic Product 11 |
| Table 2: Index of Growth in UK Gross Domestic Product at Current Prices (index 1995=100), 1997-2001 11 |
| Inflation 12 |
| Table 3: UK Rate of Inflation ( percent), 1998-2002 12 |
| Unemployment 12 |
| Table 4: Unemployment Rate and Actual Number of Unemployed Persons in the UK ( percent and 000), 1998-2002 12 |
| Household Disposable Income 13 |
| Table 5: Index of Household Disposable Income in the UK (index 1971=100), 1997-2000 13 |
| Market Position 13 |
| The UK 13 |
| Table 6: The Housebuilding Market as a percent of the Total Construction Industry in Great Britain by Value at Current Prices (£m and percent), 1998-2002 14 |
| Overseas 15 |
| 2. Market Size 16 |
| The Total Market 16 |
| Table 7: The Housebuilding Market in Great Britain by Output by Value at Current Prices (£m), 1998-2002 17 |
| Table 8: Number of Housing Starts and Completions in the UK (000 dwellings), 1997/1998-2001/2002 18 |
| By Market Sector 19 |
| Table 9: The Housebuilding Market in Great Britain by Output by Market Sector at Current Prices (£m), 1998-2002 20 |
| OVERSEAS TRADE 21 |
| 3. Industry Background 22 |
| RECENT HISTORY 22 |
| INDUSTRY SYNOPSIS 23 |
| Table 10: Industry Synopsis on the Construction of Domestic Buildings in the UK (£000, percent and £), Latest Financial Year 23 |
| Number of Companies 23 |
| Table 11: Number of UK VAT-Based Enterprises Engaged in Construction, 2002 24 |
| Employment 25 |
| Table 12: The Total UK Construction Industry by Number of Employees (000 employees), 1998-2002 25 |
| REGIONAL VARIATIONS IN THE MARKETPLACE 25 |
| DISTRIBUTION 26 |
| HOW ROBUST IS THE MARKET? 27 |
| LEGISLATION 27 |
| KEY TRADE ASSOCIATIONS 28 |
| The Chartered Institute of Housing 28 |
| Euroconstruct 28 |
| The European Construction Industry Federation 28 |
| The Federation of Master Builders 28 |
| The House Builders Federation 29 |
| The Housing Forum 29 |
| The National Federation of Builders 29 |
| The National Housebuilding Council 29 |
| The National Housing Federation 30 |
| 4. Competitor Analysis 31 |
| THE MARKETPLACE 31 |
| Market Leaders 32 |
| Taylor Woodrow PLC 32 |
| Company Structure 32 |
| Current and Future Developments 32 |
| Financial Results 33 |
| Barratt Developments PLC 33 |
| Company Structure 33 |
| Current and Future Developments 33 |
| Financial Results 34 |
| Persimmon PLC 34 |
| Company Structure 34 |
| Current and Future Developments 34 |
| Financial Results 34 |
| George Wimpey PLC 35 |
| Company Structure 35 |
| Current and Future Developments 35 |
| Financial Results 35 |
| Kier Group PLC 36 |
| Company Structure 36 |
| Current and Future Developments 36 |
| Financial Results 36 |
| Berkeley Group PLC 37 |
| Company Structure 37 |
| Current and Future Developments 37 |
| Financial Results 37 |
| Wilson Bowden PLC 38 |
| Company Structure 38 |
| Current and Future Developments 38 |
| Financial Results 38 |
| Wilson Connolly Holdings PLC 39 |
| Company Structure 39 |
| Current and Future Developments 39 |
| Financial Results 39 |
| Bellway PLC 39 |
| Company Structure 39 |
| Current and Future Developments 40 |
| Financial Results 40 |
| Redrow PLC 40 |
| Company Structure 40 |
| Current and Future Developments 40 |
| Financial Results 40 |
| Other Companies 41 |
| Westbury PLC 41 |
| OUTSIDE SUPPLIERS 41 |
| Land 41 |
| Building Materials 42 |
| Plant and Machinery 42 |
| Marketing Activity 42 |
| Table 13: Main Media Advertising Expenditure by Housebuilders in the UK (£000), Year Ending December 2002 43 |
| Exhibitions and Trade Shows 44 |
| 5. Strengths, Weaknesses, Opportunities and Threats 45 |
| STRENGTHS 45 |
| WEAKNESSES 45 |
| OPPORTUNITIES 46 |
| THREATS 46 |
| 6. Buying Behaviour 47 |
| INTRODUCTION 47 |
| CONSUMER PENETRATION 47 |
| Table 14: Penetration of Home Ownership in the UK ( percent of households owning/buying or renting), April 2001-March 2002 47 |
| Home Ownership 48 |
| By Sex 48 |
| By Age Group 49 |
| By Social Status 49 |
| By Television Region 49 |
| Characteristics of Home Owner Households 50 |
| Table 15: Household Characteristics of House Owner-Occupiers in England, 2001/2002 50 |
| Trends in Housing Prices, Borrowing and Income 51 |
| Table 16: Key Data Averages on House Prices, Loans and Borrower Income in the UK (£), 1998-2002 51 |
| Sources of Finance for Home Buying 51 |
| Table 17: Total UK Gross Advances for House Purchase by Type of Lender in the UK (£m), 1997-2001 52 |
| 7. Current Issues 53 |
| E-COMMERCE AND THE ROLE OF THE INTERNET 53 |
| INTERNATIONAL MARKETS 53 |
| THE EURO 54 |
| POLITICAL INFLUENCES 54 |
| SKILLS SHORTAGES 55 |
| LAND SHORTAGES 55 |
| HEALTH and SAFETY 55 |
| PRODUCT DEVELOPMENT 56 |
| CONSUMER DEMAND 56 |
| CORPORATE ACTIVITY 56 |
| LEGISLATION 57 |
| THE ENVIRONMENT 58 |
| Sustainability 58 |
| Environmental Policies 59 |
| 8. The Global Market 60 |
| EUROPEAN housebuilding MARKETS 60 |
| Table 18: Dwelling Stock and Completions in the EU by Population, Stock and Owner-Occupied Status (number, 000 and percent), 2000 60 |
| Figure 1: Changes in EU Housebuilding ( percent), 1990-1995 62 |
| Figure 2: Changes in EU Housebuilding ( percent), 1996-2000 63 |
| The US housebuilding Market 63 |
| Table 19: New Privately-Owned Housing Units Started in the US (000 units), 1998-2002 63 |
| Table 20: New Privately-Owned Housing Units Completed in the US (000 units), 1998-2002 64 |
| Major Trends 64 |
| Consumer Behaviour 64 |
| The Future 65 |
| 9. Forecasts 66 |
| INTRODUCTION 66 |
| FORECASTS 2003 to 2007 66 |
| Table 21: Forecast Number of New Housing Starts and Completions in the UK (000), 2003-2007 67 |
| Table 22: The Forecast Housebuilding Market in Great Britain by Output by Value at Current Prices (£m), 2003-2007 68 |
| FUTURE TRENDS 68 |
| Demographic Changes 68 |
| Table 23: Estimated Household and Population Numbers in England and Wales (000 households), 2001/2006/2011/2016/2021 69 |
| Market Segmentation 69 |
| Europe and Globalisation 69 |
| Skills Shortage 69 |
| Product Development and Technological Changes 70 |
| Competitor Forecasts 70 |
| 10. Company Profiles 71 |
| Barratt Developments PLC 72 |
| Bellway PLC 74 |
| The Berkeley Group Plc 76 |
| George Wimpey Plc 78 |
| Kier Group Plc 80 |
| Persimmon Plc 82 |
| Taylor Woodrow Plc 84 |
| Wilson Bowden Plc 86 |
| 11. Further Sources 88 |
| Associations 88 |
| Publications 91 |
| General Sources 92 |
| Bonnier Information Sources 92 |
| Government Publications 93 |
| Other Sources 94 |
Text © 2004 Key Note
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Last updated by Amanda Porteous February 2004
