Friday, June 20, 2014

Self Build Housing volumes forecast to rise over the next 5 years

In a new report published by AMA Research, self-build volumes have been forecast to rise over the next few years in response to measures recently announced by the government. How significant the increase will be is dependent on a number of factors, and the report offers three different scenarios for market growth.  

House prices and housebuilding supply are undoubtedly at - or very near - the top of the political agenda in mid-2014. House prices continue to rise by an average of around 10% across the country, though this is skewed by reported rises of around 17% in London.

Self Build and New Housing Completions UK 2010-2015
There is much political and media debate that the Government’s Help to Buy scheme is fuelling this rise, though this is generally overstated as the majority of the scheme’s funding has actually been focused on the North and Midlands where average rises are currently much lower.

At the same time, the UK has experienced a major decline in housebuilding – collapsing in 2008 and then experiencing only slow recovery since, with completion levels relatively flat in 2013 - though the volume of starts is steadily increasing. Within this scenario, the self build market has also experienced some decline since the peak of 2007, but not to the same extent as the overall market.

There are various estimates of the market for ‘self build’ in the UK, but AMA estimate the figure at around 10-11,000 dwellings in 2013, which typically accounts for around 7-8% of total housebuilding output – or around 10% of private sector output. This figure is way below the average for most ‘advanced’ countries and reflects the serious constraints on output which are well documented- and include the availability of finance, together with difficulties in obtaining suitable land and planning permission.

In general terms – and allowing for the variations within the economic/housing cycle - the underlying trend in self build output has been relatively flat, with no sign of any real significant underlying growth. However, there is no doubt that demand for self build is much higher than supply and the sector offers a great opportunity to help meet the targets to increase overall supply if the constraints were lifted.

While, volumes have seen a slight fall in volume terms in recent years, the self build market has continued to grow in value terms, reflecting increases in key component cost elements and is now estimated to be worth over £3bn. Self build tends to be a key market for higher value and often more innovative products, particularly in terms of higher standards of insulation, use of timber frame, adoption of renewable technologies and often high quality fittings, such as kitchens and bathrooms.

Commenting on the future prospects of the sector, Andrew Hartley, Director of AMA Research, said: “Over the last year, the Government has announced a series of measures to improve land availability, planning processes and financial support for the self build sector, in a bid to double the size of the market by the end of the decade. Increasing output to around 20,000 dwellings per annum may seem a realistic target, but this depends on overcoming well-entrenched problems for the sector, which will require significant commitment and action on behalf of central and local government.”

Given this background, it is unclear how the self build market will emerge both under the current government and indeed, under a new government post-2015. There is clearly an unmet demand for self build and the current crisis in the housing market would suggest that significant volume growth in the general housing market could be met by the self build sector, should all the necessary requirements be in place.

The ‘Self Build Housing Market - 2014-2018 Analysis’ report is published by AMA Research, a leading provider of market research and consultancy services within the construction and home improvement markets. The report is available now and can be ordered online at or by calling 01242 235724.

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