Memorandum by the National House-Building
Council (NHBC) (CRED 41)
NHBC (National House Building Council) is the
world's longest established standard setting body and home warranty
provider with over 20,000 builders on its Register and 1.7 million
homes protected with its Buildmark home warranty.
As a non-profit distributing company with over
70 years' experience working with the industry and the consumer,
NHBC is uniquely placed as an independent authority on the housing
industry.
NHBC also supports the industry and consumer
by providing essential services including building control, training,
health and safety and environmental services and by investing
in research, innovation and delivering industry solutions through
the NHBC Foundation and National Centre for Excellence in Housing.
NHBC welcomes this Communities and Local Government
Committee inquiry, Housing and the Credit Crunch.
NHBC's role is to raise the standards of new
build homes and provide consumer protection to homebuyers. Within
this, NHBC is committed to sharing its unique data with the wider
industry and stakeholders. Given our commitment, this submission
provides the most recent statistics which represent a unique source
of detailed up-to-date information on new home construction and
the housebuilding industry. Much of our data is available well
ahead of the Government's own statistics.
Our figures relate to new homes registered with
NHBC for its 10-year warranty, which represent in excess of 80%
of all new homes built in the UK and includes data on new home
registrations, new homes completions and average daily sales—therefore
they can provide a valuable and early indication on market trends
and the performance of the industry.
In addition to our figures, we have included
some comments on other aspects of the housebuilding industry where
they are appropriate to the inquiry's deliberations.
1. INTRODUCTION
2. The Government has in place two key housebuilding
supply targets in England: to deliver three million new homes
by 2020, and to provide 240,000 homes per year by 2016. Beyond
these supply targets there is also a sustainability agenda culminating
in the ambition for all new homes to be zero carbon by 2016.
3. In essence, in recent years, the Government
has called on the housebuilding industry to increase supply of
more affordable and more sustainable homes. These targets are
mutually achievable. However, when taken together and taken in
the context of current market conditions, meeting these targets
becomes even more challenging. To meet the Government's supply
targets will require double digit growth on year on year housing
supply if the market downturn continues until 2010-11. During
the market downturn and when the supply of new homes begins to
increase, it is essential that quality of new home construction
is not threatened by the drive to increase quantity.
SUMMARY POINTS
— The number of new homes registered
with NHBC to be built in the UK in September 2008 is down 56%
compared to September 2007.
— Average daily sales of new homes
in Great Britain has fallen to 380 in September 2008 from a peak
of 854 in January 2007.
— The mean price of new homes started
in Great Britain has fallen from £253,000 in Quarter 2 of
2008 to £244,000 in Quarter 3. This is 4% drop.
— The full market forecast is 119,492
registrations for 2008 for the UK as a whole. To reach the annual
target of building 240,000 new homes per year by the end of 2016
for England alone, volumes will need to be more than double those
experienced during 2008 for the whole of the UK.
HOUSEBUILDING: SUPPLY
4. New Homes Registered
5. NHBC statistics have already shown that
the number of applications to start building new homes in the
UK decreased 56% in September 2008 (7,055 registrations), compared
to September 2007 (15,871 registrations). Because NHBC registration
figures reflect an intention to build, they can give an early
indication of market trends.
NHBC's UK REGISTRATIONS PER MONTH SINCE SEPTEMBER
2007
6. It is possible to further breakdown these
figures and highlight areas of particular concern. For instance,
it could be of interest to the inquiry to note the differences
in the performance of the housing markets in the four separate
countries of England, Scotland, Wales and Northern Ireland. For
example, the latest figure (September 2008) for England stands
at 6006 registrations, as shown in the graph below. This is a
slightly higher figure than that for August 2008, 5,851 registrations.
ENGLAND REGISTRATIONS PER MONTH SINCE SEPTEMBER
2007
7. Similarly, Scottish registrations increased
slightly in September 2008 (594 registrations) compared to 351
in August 2008. However, this is still a sharp fall from October
2007's figure of 2,911 registrations.
SCOTLAND REGISTRATIONS PER MONTH SINCE SEPTEMBER
2007
8. Again in Wales there has been a fall
in registrations over the last year, with (again) a slight reversal
of the trend in September 2008 (275 registrations) as opposed
to August's 111.
WALES REGISTRATIONS PER MONTH SINCE SEPTEMBER
2007
9. Northern Ireland's registrations saw
no such September 2008 reversal. The latest September figure for
Northern Ireland recorded only 180 registrations in the month.
NORTHERN IRELAND REGISTRATIONS PER MONTH
SINCE SEPTEMBER 2007
10. New Homes Registered: Regional Breakdown
11. NHBC statistics are able to provide
deeper analysis of the regional housebuilding trends. For example,
the pie chart below illustrates the percentage of houses registered
to be built in each English Government Office Region, out of the
total starts in England in Quarter 3, 2008. These statistics are
not yet available from any other source.
PERCENTAGE OF HOUSES STARTED QUARTERLY IN
THE ENGLISH REGIONS FOR Q3 2008
12. NHBC's registration figures illustrate
the extent of the decline of new house building through 2008.
Current projections for 2008 are 119,492 for the UK as a whole,
this is less than 50 per cent of the Government's stated target
of 240,000 for England alone.
13. Housing Association: Private Purchase—Housebuilding
Ratio
14. Given the Committee's interest in the
operation of Housing Associations, it may be of use to note the
changing proportion of new build commissioned for the social market
as opposed to that for private purchase.
15. GB Housing Completions
16. As well as tracking new build registrations,
we also record all the homes registered with NHBC as they are
completed. A home registered with NHBC is deemed completed when
the NHBC building inspector, who carries out key stage inspections
during construction, considers that the home has been satisfactorily
completed in respect of NHBC's technical requirements. This is
normally prior to (but generally signifies that the house is ready
for) occupation.
17. Below is a graph illustrating the NHBC
completions of new homes in Great Britain from 1996 to 2007.
18. UK New Build Average Daily Sales
19. As well as recording how many new homes
are completed and ready for purchase, NHBC also charts the number
of new homes that are selling each month. The following graph
depicts notification of sales of new homes, from forms returned
to NHBC by first purchasers' solicitors. Sales are recorded in
the month in which NHBC receives the forms.
20. The average number of daily sales of
new homes in Great Britain has fallen to 380 in September 2008
from a recent peak of 854 in January 2007.
21. Mean Price of New Houses started
22. When applying to register a home with
NHBC a builder must estimate its selling price. This table represents
the mean selling prices in Great Britain at the time of application,
modified by expectations. The figures represent new homes registered
in the Private Sector only.
23. As these figures are estimates they
are subject to a number of uncertainties and anomalies. Nevertheless
they are useful as an indication of trends over time.
24. Although the mean price of new homes
started has dropped from £253,000 in Quarter 2, 2008 £244,000
to Quarter 3, 2008, it remains higher than Quarter 3, 2007 (£221,000).
25. Start Price of House Types
26. Utilising the information provided by
our registered builders, we are able to track the mean price of
homes in the private sector according the type of property. The
below table reports the percentage change in mean price for each
property type by comparing our latest NHBC statistics for Q3 2008
with last year's Q3 2007 figures.
| Property Type |
Q3,2007 | Q3, 2008
| Percentage Change |
| (£'000s) |
(£'000s) | |
| Detached Houses | 320
| 434 | 36% |
| Detached Bungalows | 244 |
230 | -6% |
| Semi-Detached Houses | 207 |
214 | 3% |
| Terraced Houses | 209 | 206
| -1% |
| Attached Bungalows | 154 |
161 | 5% |
| Flats and Maisonettes | 184
| 190 | 3% |
27. Percentage of House Types
50. The pie chart below shows the percentage of different
types of home started in Great Britain. It is interesting to note
that flats and maisonettes are still by far the most constructed
type of house. This may have implications further down the line
if the popularity of such homes dwindles.
29. HOUSEBUILDING: OTHER
ISSUES
30. Modern Methods of Construction (MMC)
31. he market downturn will continue to put pressure
on demand for affordable housing—and s and when market conditions
improve, there will certainly be a need to supply a substantial
number of new affordable homes in a narrow timeline. The use of
more modern methods of construction to speed up production and
delivery may be considered.
32. NHBC has a wealth of technical risk management expertise
on modern methods of construction, and we would advocate building
on the work of the Housing Forum demonstration projects programme
both for modern methods of construction and the sustainability/zero
carbon agenda.
33. The green agenda
34. The Government's target that all new homes must by
zero carbon by 2016 is probably the most ambitious policy the
house building industry has ever faced. NHBC is committed to supporting
the Government and industry to successfully deliver zero carbon
homes. However, based on NHBC's research and experience there
remain some challenges that need to be addressed if this is to
be achieved.
35. The issue of consumer confidence must be addressed
to prevent a situation in which builders could build zero carbon
housing without sufficient market demand for them.
36. We are concerned that the attitudes of consumers
are not fully understood at present. Not giving sufficient recognition
to the views of these future home purchasers could undermine the
efforts to meet the 2016 target.
37. The study from our research organisation, the NHBC
Foundation, found that the majority of homeowners are not ready
for zero carbon homes. Zero carbon: what does it mean for homeowners
and housebuilders?[34]
delivered an important message to industry and to Government—that
the 2016 zero carbon target is as much about the needs of homeowners
and purchasers as it is about providing technological solutions.
The survey found that only 19% of respondents favoured the visual
appearance homes that have recently been built to deliver high
levels of energy efficiency and only 6% believed the additional
cost of a zero carbon home is reasonable given the money they
will save in energy bills.
38. The purpose of commissioning this unique and ground-breaking
research was to provide valuable insight into the psychology of
homeowners and their attitudes towards environmentally friendly
housing in order to identify issues and potential barriers to
achieving the 2016 objectives.
39. The successful implementation of microgeneration
and renewable energy technologies is vital if we are to ensure
that the work of the house-building industry matches the Government's
aspirations. However, we must ensure that consumers of the future
do not suffer from short-sighted decisions and the failure to
use technology in the right place and for the right reasons.
40. The NHBC Foundation published A Review of Microgeneration
and Renewable Energy Technologies.[35]
This research was commissioned to ensure that builders and developers
understood that not all microgeneration options that were currently
available would be suited for each and every housing development.
41. It is important that the sector is allowed to make
informed choices, based on sound science and safe technologies,
backed up by effective testing and accreditation systems.
42. NHBC provides over 15,000 days of training[36]
to the industry each year. The courses are run both in-house for
the larger construction companies, and as open courses, allowing
smaller builders to attend as and when they are able.
43. The purpose of our training service is to offer a
comprehensive range of training and development programmes to
homebuilders, to directly support NHBC's standards raising and
risk management roles. Also, we aim to support home builders in
the drive for the fully qualified workforce and improved health
and safety in the industry.
44. The zero carbon agenda represents a major step change
and will have a major impact on skills as new technologies and
building practices will need to be introduced.
45. Our experience of previous step changes in building
technology is that they can lead to a "wave of error",
principally due to problems with installation and sitework, rather
than to design errors. With this in mind, for example, we are
already looking at how and where to incorporate training on achieving
increasingly higher levels of airtightness into dwellings.
46. Finally, as the leading assessor for Ecohomes and
the Code for Sustainable Homes with growing experience of post
construction experience, NHBC regularly shares best practice and
knowledge on these areas through its Sustainability and Social
Housing Forums.
47. CONCLUSION
— The number of new homes registered with NHBC to
be built in the UK in September 2008 is down 56% compared to September
2007.
— Average daily sales of new homes in Great Britain
has fallen to 380 in September 2008 from a peak of 854 in January
2007.
— The mean price of new homes started in Great Britain
has fallen from £253,000 in Quarter 2 of 2008 to £244,000
in Quarter 3. This is 4% drop.
— The full market forecast is 119,492 registrations
for 2008 for the UK as a whole. To reach the annual target of
building 240,000 new homes per year by the end of 2016 for England
alone, volumes will need to be more than double those experienced
during 2008 for the whole of the UK.
— NHBC is committed to supporting the Government
and industry to successfully deliver zero carbon homes. However,
based on NHBC's research and experience there remain some challenges
that need to be addressed if this is to be achieved.
November 2008
34
NHBC Foundation full report can be accessed via http://nhbcfoundation.org/LinkClick.aspx?fileticket=s3zCjoSY88s%3d&tabid=54&mid=385&language=en-GB Back
35
http://www.nhbcfoundation.org/LinkClick.aspx?fileticket=UzYVWRQW%2fTY%3d&tabid=54&mid=385&language=en-GB Back
36
www.nhbcbuilder.co.uk/consultancyservices/training Back
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