30th October, 2020
Every industry in the world has been impacted in one way or another by the global pandemic; but very few as negatively as the construction industry with global construction output down an estimated 20% on this time last year.
When lockdown was announced in UK, it caused housebuilders to down their tools on sites that collectively would deliver 250,000 homes this year. Knight Frank, the estate agency, predicts that the supply of new private homes is set to drop by 35% in the UK this year due to reduced onsite activity. England requires 350,000 new homes every year alone, so there is a massive shortfall to make up in the next 18 months.
However, this is not a new problem. In February 2020, the BBC reported that the UK currently has a housing shortage of over 1.2 million homes and estimate that at current construction rates it could take 15 years to bridge that gap. It is evident that even before the Covid-19 pandemic there are inherent issues with funding and the speed of which construction projects are being designed, constructed and available to the population.
This issue was earlier raised by the Independent in 2018, who stated that the UK needs to build 340,000 houses a year until 2031 to simply meet demand. In 2019, the UK reported its highest number of new houses built in a calendar year since 2008, but this number was a paltry 170,000, only half of what true demand actually needs.
The three key phases in the construction of houses are the design phase, the construction phase and the post construction stage (snagging, advertising, selling etc.).
Whilst the largest house builders including Taylor Wimpey, Persimmon and Barratt have already fine-tuned the design process, dealing with a range of standard house types to save time in the design process. The construction phase of house building remains a lengthy process, and it is evident from continually failing to meet annual government targets that an alternative should be considered. Pre-fabricated housing can definitely go a long way to addressing this problem, and it is pivotal that the UK Government, Housing Associations and House Builders invest significantly into
The big benefit of pre-fabricated housing is that is allows a significant overlap in the construction programme which was previously not possible. Instead of a 30 week construction programme, the groundworks are completed in 4 weeks with the house simultaneously constructed off-site in 8-12 weeks. Following this up with a 4 week installation phase and the house is ready for use after 16 weeks instead of 30 weeks. A further benefit is the eradication of the snagging phase as these houses are constructed to perfection in a controlled factory environment. The controlled environment also helps to deliver a more cost effective building as construction can be carried out unhindered to a tight schedule. Modular Housing is going to play a huge role in bridging this gap between supply and demand in the next 2 years.
Whilst this process could facilitate the mass production of homes, the burning question is:
Have we enough factory space to construct these?
In short, No. Factory / Warehouse space is at a premium in the UK, particularly at the minute with planes stuck in hangars, new cars in storage and significant amounts of unsold retail stock clogging up storage warehouses everywhere. This is an area the Government and House Builders need to invest in, and the Covid-19 pandemic could help facilitate this. It is highly likely in early 2021 that if normality has not resumed that the those items in storage with be disposed of / sold off at a cut price as businesses look to clear the significant overheads of storage warehouses. Therefore, the potential is there for a substantial amount of large storage premises that would be required for pre-fabricated construction could be available for lease and purchase next year at a reduced cost.
A better opportunity than ever to commit to Modular Construction?