Advancing understandings of housing supply constraints: housing market recovery and institutional transitions in British speculative housebuilding

Abstract

The vicissitudes and volatilities of recent housing market cyclicality have restructured, reconfigured and reorganized housing systems and their supply demand characteristics. Surprisingly, little attention has been paid to (re)examining supply side outcomes, much less the influencing effect of supply behaviour in response to demand-side change and their interactions. Indeed, one of the biggest unanswered questions in housing studies today is how supply side characteristics, specifically those of speculative housebuilders, have been affected by the turbulent, transitionary context presented by the global financial crisis. Addressing the gap, this paper presents a novel analysis of how Britain’s biggest housebuilders respond to significant institutional shock in their operating environment and considers how this enables and constrains housing supply outcomes in the post-recession context.

Keywords:

• Housebuilding
• housing markets
• recovery
• housing supply
• institutional analysis
• housebuilder behaviour

Acknowledgements

The author would like to express sincere thanks to the funders, all participants involved in the research and the four anonymous reviewers for their constructive comments.

Disclosure statement

No potential conflict of interest was reported by the author.

Notes

1 Market-led housing systems, typically found in advanced economies, are those in which housing is predominantly developed and proffered by market actors as a privatized commodity with relative affordability and is supported by fiscal and other public policies with the purpose of promoting speculative development and home ownership. Under such a system, housing supply is subject to cyclicality in the wider economy and the contribution of state-level provision is typically secondary to that of the market. Owner occupation is often professed as the ideal tenure in market-led housing systems because it generally offers relative stability, security and certainty when compared to alternative tenures such as social rented, private rented or shared ownership.

2 Volume builders produce 2,000–5,000 units per annum, and super builders produce over 5,000 units per annum (Payne, 2013).

3 Help to Buy (see https://www.helptobuy.gov.uk) was introduced by HM Government in 2013 as a programme to help first time buyers and those looking to move home or purchase residential property. The programme has various interventions. The most relevant is the equity loan. This sees the buyer contribute a 5% deposit which is topped up by a Government equity loan of 20% of the property value (40% within London). It is available for only new builds under £600,000 in England and £300,000 in Wales. The loan is interest free for the first 5 years.

4 An outlet is a ‘shop front’—a site with an active construction programme and new homes marketed for sale. Bigger housing development sites in multiple ownership with multiple housebuilders constructing homes will have multiple competing outlets.

5 The National Planning Policy Framework (NPPF, 2012) for England and Wales introduced a clear requirement for local authorities to keep development plans up to date to ensure a deliverable 5-year land supply, with a ‘presumption in favour of sustainable development’ to enable development whether this clear requirement was not met. Whilst the NPPF was directly beneficial to English divisions of British housebuilders, the benefits were felt at the Group Level.

Additional information

Funding

This work was supported by the British Academy/Leverhulme [Grant #SG131619].

Notes on contributors

Sarah Payne

Sarah Payne, specialises in examining institutional change in real estate development processes with aparticular emphasis on developer decision making and the state-market nexus. Her recent research has focused onchange in British housebuilding induced by carbon regulation, green infrastructure and the global financial crisis.Sarah has undertaken research funded by NERC, ESRC, RICS, MHCLG and British Academy and is currently a Co-Investigatorwith the ESRC/JRF/AHRC-funded UK Collaborative Centre for Housing Evidence.