The UK housing markets has been a bit bumpy to say the least in the last 12-18 months. Well, when I say UK, I really mean London and the South East. The two most expensive areas to live in the country have suffered, with prices dropping around 10%. Whereas where I live, in West Yorkshire, house prices have remained stable, rising anywhere between 3-7% in the past couple of years depending on the reports you read. So, good news for those looking to get on the housing ladder in London and the South East. Bad news if you’re a property investor down there.
Still, new mortgage approvals have hit a low not seen since January 2015, with 61,039 being approved in December. This is a 6% drop. There was also a 14% drop in remortgage approvals. As cheap money begins to dry up, personal debt coming more into focus and wage growth failing to catch up with inflation, housing starts to suffer.
Should the glazing industry be worried? No, not for me anyway. Here’s why.
Improvement of existing homes
Remember the Great Recession? Of course you do. It’s only been ten years. During that time, housing markets around the world, not just here, almost ground to a halt. Lending pretty much dried up. Global GDP fell through the floor. Jobs were lost. All thanks to a bank called Lehman Brothers. But I won’t pick at that thread.
One trend we did see come out of that crisis however was a generation of home owners, sitting on next-to-nothing mortgages and spare cash earmarked for other uses, go towards improving the homes they were in already. There was a huge “don’t move, improve” trend. It continued for quite a few years, until the financial climate calmed down and things returned to some sort of normal.
I see the same thing happening here. For many, spendable cash hasn’t evaporated. There are plenty of households out there that will be sitting on plenty of spare money. But perhaps that money was supposed to be used towards moving home. As the mortgage market tightens and the chances of being approved drop, many may decide it’s time to spend that money on improving their existing home instead.
This presents the window and door industry with a rare opportunity to cash in. Various reports predict that the UK fenestration market is going to contact for the next few years. But if the current mortgage climate sparks an existing home improvement splurge, then this should help our industry defy those predictions.
Ideal marketing opportunity
If we’re clever enough, we should be looking at mortgage data and making a move as an industry right now. Interest rates are going to rise faster and sharper than previously thought. Inflation is going to remain above wage growth. More likely than not mortgage approvals will continue to slide downwards. There are going to be more and more people choosing to stay where they are. This is where our industry needs to get smart.
We need to be getting in front of as many people in the coming months and demonstrating the valuable USPs our products provide. Give home owners too many reasons to not ignore us. They’re not going anywhere.
This may also be a chance for the higher end of the market to do quite well too. If home owners have been saving to move, or are sitting on a decent amount of equity in their current home, it means they should have access to pretty good levels of cash. If they’re deciding to stay put for a while, or forever, they’re more likely to be inclined to choose products at the higher end of our market. Why put cheap and cheerful windows and doors in if you only intend on staying in your current for home for the next couple of years?
If the mortgage market continues to be squeezed, you can guarantee that the media will hype the living crap out of it. You can also guarantee that very little will be made in the opportunities that will spring up from it for other industries. The UK window and door industry though should be keeping a very close eye on it all though. There is a superb chance within reach here. Perhaps another “don’t move, improve” marketing campaign will help to get things moving?
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