Demand has to be fired up again

May 9 2008 by Chris Knox, The Journal

TWO years ago, if you had told me private house building would become an area of uncertain employment prospects, I would have disagreed.

While no industry can ever truly be considered safe from a slump, the market was buoyant and demand continued to rise with the number of households.

Despite the Government’s commitment to increasing building rates, we are still failing to keep pace with the generation of new households. The problem was affordability rather than supply.

This growth in the number of homes – with many in the affordable housing sector – looked set to establish a balance which would have seen both sectors continue to flourish.

However, the credit crunch has thrown an unexpected spanner in the works and given the housing market a consumer confidence crisis. With banks’ reluctance to lend adding to the slowdown in prices, demand has dropped off, creating a domino effect.

Those who build are putting down their tools and shying away from starting new sites until demand picks up, creating a gloomy picture for workloads and employment.

Once building stops and workers are laid off, it is not a case of simply picking up the tools and starting again – the process of re-employing teams and getting the wheels back into motion is not quick.

The Government has pumped £50bn into the banks to improve their liquidity, but this is not doing anything to increase the consumer confidence which drives housing.

The driving force of public demand needs to be fired up once more.

A more direct approach is required of the Government if we are to see a restoration of confidence among buyers, particularly those looking to put a foot on the first rung of the housing ladder.

For information on Constructing Excellence in the North East, contact regional director, Catriona Lingwood, on (0191) 383-7435 or catriona@ constructingexcellence-ne.org.uk.

Jon Watson is a board member of Constructing Excellence in the North East and consultant to house builders, housing associations and local authorities throughout the UK