Slow down in the building industry

[kenneal - lagger]

I went to a seminar on the Code for Sustainable Homes earlier in the week and there was as assessor from a major company lecturing there and a representative from the National Federation of House Builders.

The Code Assessor said she has had major building companies saying that they are holding back on developments that are required to achieve Code Level 3 by Local Planning Authorities because people won't pay the extra. The NFHB rep then waded in saying that people wouldn't pay the extra for better insulation but wanted better kitchens. When I asked him if they had built any houses which hadn't sold, he had to admit that they hadn't.

It would seem that builders are cutting back on starts and blaming it on the costs due to increased insulation requirements, not on future bad trading conditions. They are trying to save costs by building sub standard houses. And Code Level 3 houses are rubbish when we should be building to insulation levels above those required by Code 6 to mitigate the problems we will have after PO.

It's about time the government started taking land away from the major national house builders, who have tied all development land up in their land banks, and giving it to people who will build houses to a high standard.

[Bozzio]

The building industry has and always will be the first industry to be affected by recession. Apparently, it used to follow a seven year cycle, something I remember being told when at university although the industry came out of the last recession about 10 years ago. I was working as an architect during the last recession and ended up giving it all up (although I had other reasons to do so and the recession just pushed me to leave a bit quicker than I might have done). It was a very bad time for most people, not least architects, technicians and surveyors. I can't remember what the figures were but I think unemployment in these professions was in excess of 50%. It was only a construction boom in Germany which gave some jobs to UK workers. I know of one or two architects who were still struggling to find work in 1999 or 2000, partly because they had been out of the picture for so long, (the recession lasted several years in all). The practice I worked for went from a work force of a few dozen people to 3, who were the partners.

I have a horrible feeling that we are about to see the same thing happen. I still work in the industry, now as a self-employed plumber, and already the work is beginning to thin. I am currently working on a few renovation projects (houses owned by and being paid for by private clients) which are being run by small house builders acting as project managers/builders who would normally be building houses but who don't want to risk their own cash quite at the moment. Things are definitely changing.

Kenneal, national house builders aside, the most difficult person on any project is the one who pays the bills. Since most builders work for a client, it is the client who should be blamed for cutting corners. I get this all the time. The client skimps here and there then complains about matters when they fail to work properly. In the meantime I and others have lost days and days of work trying to break down quotes and research different products just to appease someone who wants to make a quick buck. There are very very few people out there who will follow the law if it means they have to pay more for it. If they can bend the rules then they will and any concept of the project following the ideal is lost. In the private sector, clients tend to be more like those on Property Ladder than those on Grand designs. That said, building control usually forces smaller building firms to stick to the standards more than national ones although building control doesn't always know what the standards are which kind of proves how poorly managed and archaic the whole industry is.

[Miss Madam]

My work with housing developers has really slowed down, which is ok for me as my work in risk assessment has risen dramatically - I think there has been a sea-change in companies attitude to risk and a flip from optimism to pessimism when thinking about the future, in the last six months. And the last housing developer that we did do work for has still not paid our invoice - they are really struggling for cash at the mo'. They predominantly build in South Wales, which is an area which has seen the biggest falls in house prices (along with the West Midlands I think...). I think the canary is asphxyiating....

[Bedrock Barney]

I've been gently enquiring with a few builders over the last month or so. They have all confirmed that the number of enquiries coming across their desks has dropped quite a bit. No panic as yet as they (and most people in the construction industry) have probably been too busy since about 2002 anyway so are able to 'give a bit'. However memories of the early 1990's are still pretty clear for anyone over the age of about 35 to 40. The transition from busy to bust can be frightenly quick. I remember two builders going pop on projects under my control back in 92 in fairly quick succession.

[Ballard]

http://www.financemarkets.co.uk/2008/04 ... s-plummet/

Persimmon halts new developments as sales plummet

Britain?s largest housebuilder, Persimmon, is calling a halt to all planned developments until mortgage conditions have improved.

The company has reported a sharp decline in sales over the past three weeks, despite April traditionally being the busiest time of the year for housebuilders, and has recorded a 24% decline in sales since the beginning of this year.

I'm currently involved in large commercial development, (not very PO, but I quite enjoy it), and I would say things have turned from absolutely manic to just frantic. However I am under no illusions, things may turn quite bad, houses first, offices next.

I was keen to do much more in the ?low energy buildings? side of things, but I think that unfortunately that will be the first to vanish as credit dries up. There is no sense to this, but as money gets tighter people will want ?the same? for less, and the stuff you can?t see such as insulation, under-floor heating, etc will be dropped by clients trying to cut costs, believe me I?ve banged on about energy issues and the need for future proof buildings until the clients have told me to shut up or get off the job.

I?m in a very diverse practice however with work booked for the next 6 years, after that who knows? Back to computer games I guess, they always do well during a recession. More time at the allotment would be welcomed however.

[jmb]

We live on a "new" development near Cambridge (planned in 80s, building started mid-'98) where the next phase, the third of three "villages" is now underway - but the last interesting news I heard was that the consortium of builders haven't made a single sale this year (even though they're still lobbying for more rights to build). Subcontractors are apparently not being given new work to do.

[kenneal - lagger]

The building industry always catches cold first, then spreads it to the rest of the economy at a rapid rate.

[Bedrock Barney]

We seem to be getting more literature mailshots (and email pitches) at the moment from construction industry firms and specialists. This suggests that order books and enquiry levels are going down and the various marketing departments are ramping up. Even took a call today from a scaffolding firm who'd given me a quote on a spec job about 2 years ago. That tells me that people are getting twitchy.

[Bedrock Barney]

Phoned again by the same scaffolding firm (see post above). They've obviously worked their way through their directory of contacts and have started again!

Just read today's Building Magazine (one of the primary construction industry magazines.) Very doomy gloomy with a big article entitled 'the double squeeze', ie construction output plummeting and materials prices soaring. A pretty unique combination apparently (although not sure how far back they have looked). The article finished by talking about the Darwinian effect of good strong businesses surviving and the weak falling by the wayside - not exactly encouraging talk.

[rs]

We wanted some building work doing on the house, spent weeks researching our requirements, spoke to several builders who were very difficult to pin down on time and cost. In the end it took several months before I could finally nail them down this spring.

Due to their workload they couldn't start until the summer but now they are phoning every week to see if we are ready for them to begin work!

My how times change.

[adam2]

As I have posted elswhere on the forums I need some work done at Mothers house, in Minehead, two local builders appeared uninterested, and the third qouted what seemed to me a silly price.
I shall wait a few weeks and enquire again!