The domestic economy needs a boost. Consumers are starting to reign in spending, which is bad news for those who sell big ticket items, like windows and doors. High value purchases are always the first things to be scrapped when things look a bit tight. You only need to look at new and uses car sales in the last few months to see that in action.
As Brexit approaches, and the EU continues to look as inflexible as ever, the risks the UK economy become all the more clearer. So, as we prepare to leave, the Government should be looking at things it can do here to shore things up and keep the economy moving.
Perhaps one of the most vital things it could do would be to finally unlock the chronic housing problem plaguing this country.
Build like we’ve never built before
Quite simply there is not enough housing. Wages have stagnated, the value of homes have risen far faster. The sheer size of the deposits required for first time buyers puts them out of reach for many, many people. We are now stuck with a generation trapped at home with parents or in the rent cycle and can’t get out.
But we still need homes. Our population continues to grow and demand for property isn’t ever going to go away. Considering that construction is one of our country’s biggest GDP generators, it would make complete sense to focus on this area of the economy and quickly.
It is estimated that we need to build 250,000 to 300,000 new homes per year for the next few years if we are to have any chance of bringing ourselves back level with demand. Currently, we’re only building about half of that number per year. If we are to tackle our housing crisis, which the window industry very much has a large vested interest in, a major boost in home building has to start right now.
It also has to be a mix of buildings. Be it private, social or self-build. There has to be a mix to cater for all needs. And we also need to be looking at more innovative ways in which to build. Homes made from traditional bricks and mortar is still a very old fashioned way to build a home. It’s time consuming, labour intensive, inefficient and expensive. There are an increasingly diverse number of ways in which to build high quality, low-cost, efficient and safe homes for families without having to use the archaic brick method.
For the window and door industry, we need to see this happen soon. The predicted slowdown in our market is supposedly already hitting us now. Figures suggest a 4% drop this year, and at least 2% next year. But, if we were to see a strong spurt in house building during these next few years, the downturn from the retro-fit residential market could be negated by a boost in large scale new-builds. Build more house, need more windows and doors, it’s as simple as that.
If, and it’s a mammoth “if” given the track record of previous and current UK governments, we can get somewhere close to 300k new homes a year, this would present a major opportunity for the window and door industry, as well as all other associated industries with housing and construction.
Housing a big key to unlocking growth
One of the biggest causes for crippling house price rises has been the lack of supply. Rising house prices are great if you own one, but awful if you’re trying to get on that first rung of the ladder. Unless you’re in London, house prices have continued to rise across the country, but wage growth and productivity have not kept up the same pace. This has led to a squeeze on finances for a whole generation that simply cannot afford to save for large deposits.
If we could build those 300,000 houses per year, assuming we could get the labour and skilled workers in the right numbers, the extra supply should be able to give those looking for a first home a chance. It may stabilise the sky rocketing prices, perhaps even causing them to dip in certain areas. Not a desirable scenario for current home owners, but better news for first time buyers.
There is a fine balance to strike here. We don’t need prices to fall away in any dramatic way, that would lock people into their homes with negative equity. But we need to radically increase supply of all types of homes if we are to give the generation trapped at home with mum and dad a chance to spread their wings and contribute to the UK economy. What is often missed is that first timer buyers of homes contribute massively to the UK economy. They spend on their homes via home improvement works, like kitchens, bathrooms, new windows and doors, extensions and so on. Providing a boost to all sorts of trades. If these people cannot get into homes, that boost isn’t going to come. Installers reading this will know many of their jobs come from people renovating homes that they have just moved into.
Away from our industry, there is a wider benefit to the whole of the UK economy. Jobs will be created, thousands of them. Labourers and skilled workers, those that we have at least, will be put to work. All sorts of trades and industries would be involved, providing boosts for them also.
I would also like to see new building methods trialled. Pre-fabrication I see is a major way forward. I have seen some very high quality, well built, efficient and long term cost effective pre-fabrication building methods which could quickly transform how we approach housing in this country. Bricks and mortar isn’t the sustainable building solution that we need in 2017.
With Brexit fast approaching and a housing market in dire need of a drastic overhaul, I would like to see the UK government tackle this problem head on with innovative ideas and swift, meaningful actions.
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