There are many good reasons why modern homes should be made in a factory. There are no good reasons why they shouldn’t. Practically everything else we use in our lives comes from a factory and we are very happy with them, so why not our homes too? We expect our cars, TV’s computers and phones to be mass-produced, and would be very surprised to find that they weren’t, in fact we wouldn’t buy them if we found that they were hand-made by a group of people brought together in a muddy field and given instructions in how to build them, in a language not their own, and chosen because they provided the lowest price or just happened to be available that day.
Manufactured homes are more likely to meet the stringent quality standards demanded by regulations for new homes because it’s much easier to check quality when the product is being made in a warm building, out of the wind and rain. Workers of all ages and backgrounds can be employed in a factory because they are not expected to carry heavy loads up ladders, or withstand the cold. So the workforce can be from a wider demographic and different backgrounds.
In the current economic conditions this factor is lowering the cost of building homes in a factory as wages for fully employed people are stable. The self-employed sub-contractors who do much of the work on traditional building sites are raising their wages as much as possible because they can. In the rush to build homes, there is a shortage of labour such as bricklayers and carpenters, so the ones that are available can charge a lot for their skills.
Factories are less exposed to this wage inflation because their workers are permanently employed and therefore can’t demand increases in their wages at short notice. Factory owners tell me that last year, their homes were more expensive to build than traditional buildings, but could be built more quickly. This year they can be built for the same price, but more quickly, and next year they will be cheaper to build, and more quickly.
There is a further promise of factory production which is the expectation that someday we will be able to order our home online and change the design to suit ourselves. If this sounds far-fetched, they have been doing this in Japan for decades. Companies with familiar names like Toyota have constructed tens of thousands of such homes for their customers, most of which have been customised to some degree. Factories with a high degree of automation can cope with a change in design easily, provided that the robot can be given the correct template to use, it doesn’t care if it does the same job ten times a day, or ten different jobs.
The key element is that the robot is given a template to work from. Customisation does not mean that the customer can have what they want in every case, it means that they can choose from a wide range of features that ensures that no two houses are ever the same. It only takes nine variants in a house design to produce over 300,000 different homes, so customers can be satisfied that they have a unique product and the factory can continue to produce a unique design from relatively standardised components.
There is a reason why the difference in quality between a factory-made home and a traditionally built home is not obvious to the average housebuyer or renter. No-one tells them, and the quality difference is not reflected in the sales price. We have the ridiculous situation where the location and number of bedrooms in a property sets the value, and the quality of the finished home counts for very little, apart from its use as a bargaining chip to reduce the price where there are defects, but rarely to increase it beyond what is normally paid in that area.
If a housebuilder does a very good job of building a traditional home, or a bad job, it makes no difference to the price. If the home is hard to heat or very efficient, it may be interesting to the purchaser, but it makes no difference to the price. If the three bedrooms of one property are bigger than the three bedrooms of the other, it makes no difference to the price. In a market like this it is very difficult for a housebuilder to concentrate on a quality product, since it makes no difference to his profits.
In new development this is exacerbated by the lack of previous sales figures in the area. Mortgage providers look at sales values for fifty year old properties in the same location to use as a benchmark for the values of new homes under construction, ignoring the enormous quality gap between the two in terms of performance.
We are trying to change this by introducing a way that purchasers and renters can see the difference in the quality of their new home. By creating a Home Performance Label with the help of BLP Insurance and The Housing Forum, we are enabling people to rank their potential purchases in order of size, if that’s what they care about, or in order of energy efficiency, price per square meter, daylight, or maintenance costs, or many other metrics. This way of making a purchasing choice is familiar to anyone who has bought a car, insurance, a phone, electricity or a fridge in recent years. We think it’s time that such a tool was available to the housing market.
By helping people to make their choices based on quantitive information as well as qualitative information we expect to drive up the quality of new homes in the same way that comparison shopping has driven the market in electronic goods. The product of tomorrow should be better than the product of today and offered at the same price. This is how markets should work. There should be room for low quality products and high quality products, at different price points, but the housing market currently values both the high quality and the low quality products in the same way, leaving no room for a quality premium. Because price is also set by location the current pricing system keeps the housing quality low in poorer areas and reduces the likelihood of regeneration where it is needed most.
Finally, in order to deliver anything like the number of homes we need, the housing industry in the UK must double in size. Output is currently about half of what we need to sustain the market without prices continually rising. This growth won’t be achieved b adding more workers from abroad, working in muddy fields at low productivity levels. It will be achieved if we create a functioning offsite manufacturing sector, distributed across the UK, using a well-organised workforce, operating in a market where higher quality products get the sales prices that they deserve.
A version of this article first appeared in The Housing Forum report, ‘More Homes Through Manufacture‘ supported by the Hyde Group.