It’s interesting to see how Sir Oliver Letwin’s draft report acknowledged the realities facing the housing sector, but also recognised that it is in developers’ interests to complete as many house sales as soon as possible.
Indeed, it is these sales that fund the next stage of development or another site. Land acquisitions are developers’ lifeblood and key to their strategy. Land banking is not a valuable exercise for housebuilders – it is a necessary resource.
The report focuses on market ‘absorption rate’ – the proposition that housing products are drip-fed into a local market to sustain price, but at a pace symptomatic of larger sites, which are naturally slower to come out of the ground.
While the government’s policies have recently driven larger settlements,the analysis reveals that scale is inhibiting the variety necessary to increase build-out rates.
The financial crisis priced smaller developers out of the market – they could neither secure development finance nor achieve economies of scale. They are slowly re-emerging but there is a long way to go before SMEs will have significant influence.
Find out more - #RESIdebate on the future of housing
The key appears to be incentivising multiple outlets and more variety of house types on larger sites – but the report recognises that development economics are highly sensitive to policy intervention and we await detailed recommendations in the autumn final report.
Collaboration is part of the solution between all parties involved and all parties are determined to avoid knee-jerk responses that could result in poor-quality, unsustainable schemes. Considered placemaking takes more time and also involves, quite rightly, discussions with local communities.
Flexibility of construction is another response. Established developers and new entrepreneurs are looking at offsite modular construction both for speed and as a way to overcome an over-reliance on one material – bricks.