Our editor-at-large takes a look at how the UK’s big housebuilders are making such huge profits
Occasionally a piece of information comes to light – a fact, some new science, a commonly held opinion maybe – that utterly changes your view. This happens to me increasingly as I get older and it’s an experience I’m growing to enjoy, mainly because it stimulates me. So I’m delighted to announce that I was wrong. I’ve been wrong for several years. I’ve written with absolute confidence for yonks about the crises that pervade our construction industry and how we build such small, badly put-together homes because land is so expensive in the UK and because construction costs have risen inexorably. The huge price rises for timber, steel and concrete have put paid to so many dreams for so many homebuilders. To build green is even more expensive. If you watch Grand Designs, like me you will know this to be the case.
Except it isn’t. At least not for everybody. For every heroic, vainglorious, ever-striving self-builder that we film, there is an individually penned tale of woe and self-inflicted pain, of busted budgets and damaged ambition, stilted hope and long overdue conclusions. We don’t make these stories up; every one of our contributors complains of crippling price rises, especially during and after the Covid lockdowns and the post-Brexit mess in the UK’s European import markets.
Every small building firm has had the same issues to contend with in the past five years. But there is another world, an upside-down version of this reality that exists at huge scale in the UK in the volume house market.
You may not believe me, in which case I can refer you to a piece of 2023 research from Brunel University London. It’s in an article bluntly titled Builders Are Making Thumping Profits by Over-Charging for New Homes written by Dr Simon Roberts and Dr Colin Axon and published by The Conversation (theconversation.com).
Their research compares 22 publicly accessible national datasets from information collated by the Office for National Statistics (ONS, ons.gov.uk) to the published accounts of the major UK housebuilders between 1998 and 2020. And their findings seem incontrovertible. If you thought, as I did, that land in the UK is expensive and restricted in sales opportunities thanks to a high population density, a restrictive planning system and a highly controlled market, making it difficult for any self-builder to find a plot, look in the upside-down. Even respected journalists don’t look there.
‘The Financial Time
