An interesting thought.. 1.4 billion bricks needed to fix UK housing market

1.4 BILLION BRICKS NEEDED TO FIX UK HOUSING MARKET
• The UK bricks shortage is a significant factor in rising house prices
• Shortage of bricks cannot meet growing demand to plug 264,000 housing deficit
• Brexit expected to worsen the issue – and with all the willingness to build, without more bricks, the housing crisis cannot be fixed
• NAEA launches Bricks Report, compiled with Cebr

A shortage of brick supply has been a contributing factor in rising house prices over the past decade, as growing demand continues to outstrip availability of housing. Even with willingness from contractors to build homes following Brexit, the UK’s construction sector would require a total of 1.4 billion bricks in order to resolve the housing shortage in the UK. This is the equivalent of the total amount which would be needed to build all the houses in Leicestershire1, reveals the Bricks Report from National Association of Estate Agents (NAEA), compiled with the Centre for Economics and Business Research (Cebr).

Growing demand amid a lack of bricks to build
Between 2006 and 2016, the growing UK population triggered exponential growth in demand, and has now outgrown the number of houses being built. Given that in 2016 the average UK home is made up of 5,180 bricks, resolving the housing shortage of 264,000 units would require 1.4 billion bricks2.

While house prices are impacted by numerous macroeconomic factors, they are fundamentally driven by the supply and demand of housing units. The shortage of homes has led to sharp house price appreciation and prevented many prospective buyers from getting onto the property ladder.

What the deficit could build
The 1.4 billion bricks deficit could in theory build several of the UK’s famous landmarks several times over3, including:
• 740 Big Bens
• 40 Tower Bridges
• 3,090 Manchester Town Halls
• 4,540 Warwick Castles
• 5,830 Conwy Castles

Bricks and Brexit
The impact of Brexit could significantly worsen the issue. In 2015, 85 per cent of all imported clay and cement (primary brick components) came from the EU, and so depending on how trade negotiations develop, Brexit could have a considerable impact on supply.

The extent of the shortage
Brick stock steadily declined between 2008 and 2013 and only partially recovered in 2014 and 2015. Two-thirds of small and medium-sized construction businesses faced a two-month wait for new brick orders last year, with almost a quarter waiting for up to four months and one in six (16 per cent) waiting six to eight months.4 This can partially be explained by the slowdown in building following the recession.

Even though houses are shrinking, we still don’t have enough bricks
Over the past 100 years, the size of the average UK home has shrunk significantly. In the 1920s the average dwelling was 153m2 and almost 100 years later, in 2016, the average home is approximately half the size at 83m2 – meaning homes have shrunk by 46 per cent in the last century. This is partly a result of the fact families are generally smaller, so require less space – however the decrease can also be explained by financial restrictions. As house prices have risen astronomically – 45 per cent over the past ten years – house buyers have been forced to settle for smaller properties.

Over the last ten years the average UK home has shrunk by nine per cent, or 228 bricks. In 2006, the average UK home was 91 m2 in size and required a total of 5,408 bricks5 Now, 10 years later, as the size of homes have reduced, the average new home requires 5,180 bricks – but there still are not enough to meet demand to fill the housing deficit.

Matthew Gray, Regional Executive for Scotland,  National Association of Estate Agents (NAEA) comments: “We all know that the massive lack of supply in housing is an issue that needs resolving urgently. As well as freeing up more land to ensure we can build the right sort of houses in the right places, it’s crucial we have the right materials and skills to do so. It seems a simple consideration but the fact that we don’t have enough bricks to meet demand has a very real effect and holds up the process from beginning to end. We’re concerned that the impact of the EU Referendum means this problem could get worse as we rely on the import of brick components from the EU and of course many of our skilled labourers come from there too.”

Housebuilding threatened by skills shortage
Alongside the shortage of bricks, a skills shortage in the UK has also restricted housebuilding as construction based jobs are decreasing in popularity. This is a result of housebuilding slowing down during the recession, prompting workers to find alternative careers, and many choosing not to return when the market recovered. The recent vote to leave the EU may impose greater restrictions on foreign workers coming into the UK, which could also compromise the UK’s ability to build homes. Additionally, fewer young people are obtaining the training necessary to fill roles in the field so trade bodies are now calling for government incentives to make construction apprenticeships more attractive.

Matthew Gray continued: “The UK housing market is in crisis, with young buyers unable to get on the ladder, and families continuing to live in houses they’ve out-grown for longer than traditionally they would have had to. Houses may be getting smaller but we are needing to build more of them than ever so ultimately our needs for bricks is greater than before. We need investment in the sector to boost production, and housebuilding needs an image overhaul, to become a more attractive career prospect for school leavers and graduates.

“Until this is addressed, we might as well resign ourselves to a life time of astronomical prices and falling levels of home-ownership.”

[info]
For More Information Contact:

Matthew Gray
Mobile: 07730 001053
Direct Dial: 0131 516 5367
Email: mgray@gilsongray.co.uk

[/info]

The information and opinions contained in this blog are for information only. They are not intended to constitute advice and should not be relied upon or considered as a replacement for advice. Before acting on any of the information contained in this blog, please seek specific advice from Gilson Gray.