Housebuilding 2.0

Is the concept of a house about to change, just as the sector does?

Mass-scale housing production in the UK began with the Industrial Revolution, as people flocked to the cities for newly created factory jobs. The accommodation built to accommodate them was often squalid, with large factory populations squeezed into small areas, leading to the classical slums of ‘Dickensian’ Britain.

There was, however, a growing middle class, and this era also saw the beginning of the Victorian terraced housing which we all recognise today. Amazingly, the way we build houses today uses fundamentally the same principles that were common back then.

All this could be about to change, but first, we should examine why…

Unreachable Growth

In the November 2017 Budget, Chancellor of the Exchequer Philip Hammond reiterated the government’s aim to “be delivering about 300,000 homes per year”. In context, this figure is over double the average housing delivery since 2010 of just 122,704 per year.

There are plenty of arguments as to where the problem lies. Some blame the bureaucratic planning system, although the flurry of tech innovation in the sector through companies such as REalyse are rapidly leading to a more transparent land market and a simplified approach to planning.

Others argue that house builders and construction firms are guilty of slowing housing delivery rates to boost land values, and that the barriers to entry for SME builders are too high. Irrespective of the validity of any of these claims, the reality is that, from a delivery perspective, our construction industry is already at breaking point, unlikely to be capable of building more homes each year while maintaining the quality standards we’d all demand and expect as discerning consumers.

Quality of new build housing in the UK is already under increasing scrutiny. A recent survey by New Homes Review suggested that 35% of consumers were worried about poor build quality of new homes. This fear has been fuelled by worrying trends amongst some of the large builders. In May last year Ian Tyler, the chief executive of Bovis, had to apologise after hundreds of homebuyers alleged that their new houses were riddled with defects.

It’s easy to imagine what might happen to quality levels if our current workforce was suddenly forced to build more than twice the number of homes every year!

Unfortunately, the problems don’t stop there. In his government-appointed review of the UK’s construction labour model in 2016, Mark Farmer warned that capacity-led construction cost inflation was leading to many residential projects being commercially unviable, but also that there is a structural time-bomb within the industry, due to the workforce’s size and demographic. Farmer warns that, based purely on existing workforce age and current levels of new entrant attraction, we could see a 20–25% decline in the available labour force in construction within just a single decade.

All this evidence begs the question: irrespective of planning and financial viability concerns, how are we going maintain the current levels of housing delivery to a high quality that consumers will accept, let alone start to bridge the huge delivery shortfall?

The off-site revolution

Luckily, there are potential solutions out there, which could lead to a far more positive revolution in housebuilding than we might have hoped for — and move us out of the past.

One answer would be to increase productivity. Research by Mace indicates that, if construction productivity rates had kept pace with those of manufacturing, UK infrastructure could have been delivered 33 per cent quicker. But how do you increase productivity in a sector which is doing things the same way it has for the last 150 years?

The remedy will come from technology and innovation, which has the potential to: attract young talent back to the industry, increase sluggish productivity, boost quality, and radically change the way we think about mass-housing design.

The off-site revolution has already begun. Companies like Urban Splash, L&G, nHouse and TopHat are all pioneering volumetric forms of housing delivery (whole houses built off-site) whilst others are focussing on modular components that can then be assembled.

Approaches vary in sophistication, from the factory assembly of externally-sourced component parts to fully vertically-integrated, factory-built solutions. Most are favouring timber as the material for the frame; external cladding with other materials mean that a traditional look can still be achieved.

Homes on the production line

Manufacturing-line-style construction should lead to greater consistency (and therefore quality) and faster delivery, leading to higher productivity. Quality can be further improved with 3D modelling working hand-in-glove with other tech innovations, such as laser-guided timber cutting, in other words, the full digitisation of the process. Moreover, this method should lead to greater consumer choice as producers strive for a model whereby (like buying a car online) buyers can specify certain key elements of their home.

The holy grail of this new approach is a vertically integrated tech-enabled solution where (like BIM Level 4) a new home and its digital twin co-exist from the start-to-finish of their life cycles. Perhaps more enticing though is wondering whether we will we get to a stage of mass-produced fully-customisable homes?

New advances, such as 3D printing, and ever developing manufacturing processes may soon mean that skilled artisanal construction skills (think ornate decoration) may be able to be part-automated, meaning that the only limitations to exterior design could soon become the architect’s imagination, rather than the client’s budget.

The challenge then moves from constantly thinking about how we can deliver more houses to how we can retain reasonable levels of homogeneity and control in urban design, while still allowing for individual style and choice in mass-housing.

From where we are now, it would be a lovely problem to have. Viva la revolution! — — Bert Broadhead is a real estate investor for Alteris, and also hosts the Building our Future Pod-cast, interviewing design, construction and real estate investment experts to explore what will shape the future of the housing sector — and how you can get involved.

https://www.buildingourfuture.net/

‘REalyse (Treex Ltd) does not provide any form of investment advice or property advice or any other regulated function. Note that any information or opinions, presented or referred to in this article are for information purposes only. Any actions taken by a reader are done entirely at their own discretion, you are responsible for your own investment decisions and hold Treex Ltd harmless from the results of any such decisions’. Whilst every effort has been made to ensure the accuracy of the information herein some inaccuracies may remain.’

Originally published at realyse.com.