Welcome to TDM’s first blog of 2019

We are first going to take a look back at the predictions we made for 2018 and how many became a reality.

  • House Building to reach record levels
  • Replacement for Help to Buy
  • Construction Sector demand to increase
  • Increase in Affordable Modular New Homes
  • A Top 10 PLC Merger

Well in point blank summary not all of these items came true, but a number did come true either partially or fully.

House building completions did hit record levels and was more or less at pre-crash levels. However, there does seem some concern around the fact that new home starts are not continuing to be driven forward. So overall, I think we can say this prediction did come true.

A replacement for Help to Buy did not come, it simply got extended with more limitations. Clearly the Government still needs this flagship “policy weapon” to help drive the industry towards the targets of building new homes. Here at TDM though we still have a view, like an increasingly vocal number that the policy is not being targeted necessarily at the right levels of the industry.

Overall therefore I don’t think we can class this prediction as being met as the Government simply extended the current policy.

Construction sector demand went through a fluctuating period throughout 2018. However, “drilling” into the detail instead of the overall construction sector demand found that residential housebuilding was one of the strongest performing areas in the industry.

Some of the threats to the sector still remain into 2019, and bluntly, are likely to continue for a number of years going forward. For example, the major shortage of skills and the issues of how much of the UK construction industry is supported by overseas workers will continue for some time.

There are signs of change with further investment and apprenticeships now pushing for the next “wave” of workers in the industry. Furthermore, the industry is also beginning to adopt viewpoints of increasing diversity with intense focus on reducing the levels of gender inequality and the numerous issues that surround that area.

The next prediction for 2018 was that there was going to see further increase of affordable modular homes. Well this prediction definitely came true, but really did not just apply to more affordable end of the market.

Nearly all the major players, alongside many lesser known names got plans and investment strategies in place that would seem them deliver modular homes in reduced timescales.

The usage of modular homes also seems by the industry to be a major “weapon” in the scramble to meet the Government’s house building targets as it is less reliant on the traditional methods of building homes and obviously can see new homes delivered in significant shorter periods.

Furthermore, with the number of snags dramatically increasing the industry it potentially provides a way to reduce the number of issues to new home owners.

The final prediction was a Top 10 PLC House Builder merging, or another being acquired. Well this did not happen put simply.

So, what do TDM predict for 2019?

  • Additional Government Pressure to Build New Homes

If many industry sources are correct then the industry has been completing many new homes, however the devil is in the detail and the lack of new starts has the potential to completely derail Government efforts to reach the challenging, almost mythical, 300,000 new homes in a year.

Therefore, it is likely the Government where possible will exert more pressure on house builders to keep building even with the issues of Brexit abound.

  • Further Government Schemes or Extensions, like Help to Buy

The Government elected to extend the Help to Buy scheme in 2018, albeit on more strict terms. But clearly if the sector fails to engage in aiding to reach the Government targets then they may elect to bring further extensions or schemes to market to make it more possible for housebuilders to simply build more new homes.

  • Further Expansion, Investment, Acquisition and Strategies focused on Modern Methods of Construction

Last year was really the year modular housebuilding made major in roads for many in the residential property sector. As our prediction was right in 2018, chances are that this expansion will only continue, but not necessarily just in the form of “modular” construction.

Modern methods of construction goes further than just modular construction and can include pre-cast concrete elements and other innovations that seek to reduce the time on site. Will we begin to see such methods being used to deliver even quicker results than simply using modular factory-built walls and other elements?

  • Increasing focus on Diversity Policies and Strategies across every sector in the industry

There are currently many articles and case studies highlighting the fact that many companies within the residential property market are breaking down the lack of diversity within the market.

In a majority this has been focused currently on the issue of gender diversity and the fact that most of the industry is male dominated with females only making up a small proportion.

From many studies this has pointed also to the fact that even those females working in the industry tend to be what are considered “softer skills”. As opposed to those identifying land, designing, engineering or delivering the finished new homes.

In essence in this prediction there is one of further focus on the issues of diversity, but furthermore will more companies be focusing policies on the issues beyond just gender diversity?

Secondly, how will those strategies actually achieve the aims of bringing greater diversity and alternative views into the industry?

  • Skills Shortage to become more intense within the construction industry

The industry has struggled with this issue for a number of years, and we even highlighted that this is likely to continue for a number of years. So why make a prediction about it?

Well there have been a number of reports and studies that last year attempted to estimate how bad the issue of the skills shortage actually was. In many cases these studies found that the industry, more so in London was using significant levels of overseas skilled workers.

Clearly with Brexit on the horizon the issues of a skills shortage are only going to be made worse if overseas talent coming in is reduced and the potential for that talent to leave the UK workforce.

Let us know your predictions for 2019 in the residential property market.