I spoke last week at the Residential Construction Network hosted by the RICS in Westminster.
The three speakers were myself, Paul Inch from Innovare and Jean-Marc Bouvier from Nudura Insulated Concrete Formwork.
I introduced the topic by pointing out the continuing and rising gap between housing production in the UK and housing need. See image below. At current levels of construction and demand we will see two million people short of a home by 2030.
My view is that offsite construction is needed to fill the gap because the gap is mainly made up of people who cannot afford to buy their own homes at current prices, and are unlikely to ever do so. Affordable housing including shared ownership models needs to be provided for them by Registered Housing Providers(RHP’s) and by the Private Rental Sector(PRS).
There is little or no motivation for the private sector to build more housing than their current capacity to deliver. The hostorical figures show that speculative housing rarely delivers over 150,000 homes per year. They are making good profits with current numbers, so why would they change a formula that is working?
The current housing industry based on speculative housing for sale tends to use traditional construction methods as the average rate of sales on sites is slow and building faster doesn’t actually make much difference to them. What does make a difference is changing labour rates, particularly in a boom which makes their land and construction pricing difficult to predict. The regular boom and bust cycle in UK housing means that they are unlikely to either dramatically change their levels of housing supply or change the way that they build.
A possible solution to the problem is to marry up the large balance sheets of local authorities and RHP’s and use additional borrowing to construct homes offsite. This would require decisions on the part of these large clients to support a new industrial sector, housing manufacturing. A medium sized factory could supply 2,000 homes per year, but investors will only commit to constructing such facilities with a confirmed pipeline of demand. There can be competitive tendering, but between similar factories, and not between factories and site operations. This is not to promote more expensive housing, but to give factories the support they need to get going. Clients need to decide that this is the route to deliver affordable housing and government needs to support them in any way it can.
Ten new factories every year for five years will deliver 50,000 new dwellings that we are currently not building, from finance we are not using. That will go a long way to closing the gap in the housing supply. Once the market in offsite manufacturing is more mature, it can expand to take up the remaining gap and supply products to the sale market. The factories can be distributed across the country to places where there is greatest housing need and staffed by locally trained people. These plants can be set up and be running within a year, particularly if they use timber frame manufacturing. The jobs will be stable long term ones, possibly as many as 100 per factory. Thats 5,000 jobs within five years without counting the site works and the finishing trades on site. Its not wise to construct entire dwellings in factories, some work needs to be done on site to prepare foundations, and to finish the facade and roof on site.
Paul Inch, Business Development Director, Innovare
Innovare are one such factory, constructing homes and schools from their factory in Coventry using Structural Insulated Panels. They have a strong history of building high performing homes and buildings that provide very well-insulated building fabric. This is achieved by constructing using large format panels containing the building structure and insulation. Speed of construction is much faster than traditional methods and the quality of the final building is higher, particularly delivering low levels of air leakage and reducing the heating demand from the finished building.
In Paul’s opinion, RHP’s should use the market to deliver their buildings and not try and go it alone. There is a lot of manufacturing skills in the market and it is best left to the market to provide it rather than try and bring it in-house as some RHP’s have done.
Jean Marc Bouvier Director of International Sales and Business Development
Jean Marc Bouvier from Nudura Corporation, a supplier of Insulated Concrete Formwork products described their system. It provides large insulation panels that fit together much like Lego and are then filled in with poured concrete to form the walls of the design. It is a very rapid form of construction and delivers very high performance buildings. By using large lightweight elements the construciton process is safer and quicker, and because of the pured concrete there are no air gaps in the construction. Another benefit is that it is very resilient to wind effects and is being used to construct storm shelters in the southern regions of the US. Like SiPs it enables a highly productive delivery, with far fewer man-hours required to deliver the finished building compared to traditional building methods.