The UK's Housing Stock - Is There A Demand For New Homes?

[AsleepInYorkshire]

National Statistics
A UK Government Website

Survey Published December 2022 - English Housing Survey 2021 to 2022: headline report

Introduction and main findings

1. The English Housing Survey (EHS) is a national survey of people’s housing circumstances and the condition and energy efficiency of housing in England. It is one of the longest standing government surveys and was first run in 1967. This report provides the findings from the 2021-22 survey.

The amount of Co2 produced by our homes in the UK is around 16% of the UK's total Co2 production. It's the fourth largest contributor to the total Co2 produced in the UK.

1. Transport 24%
2. Energy Supply 21%
3. Business 17%
4. Residential 16%

The UK's housing stock - Figure 2.1: Occupied dwellings, by tenure, 2021 (Source as top of post)


Figure 2.2: Occupied dwelling age, by tenure, 2021 (Source as top of post)



The UK's Building Regulations Part L provide the standards a new home should meet in regard to the amount of heat loss permissible. This dictates the level of insulation required in a new home.

Since the early 1980’s the amount of insulation needed in new homes has increased. Modern homes require substantial levels of insulation. Compared to a home built in the early 1990’s today’s homes are vastly superior at retaining heat. This reduces the cost to heat a new home, the amount of Co2 produced to heat it and the amount of power needed by the country to heat its homes.

Figure 2.2 is revealing. The UK’s housing stock is reasonably old. Whilst older homes can have some insulation fitted to improve their heat loss this doesn’t bring an old home even close to a new when comparing heat loss.

This is possibly one reason why over generations to come we will need to replace our housing stock. A significant number of the UK's housing stock was built before 1980.

Much of our older housing stock will require either demolition or substantial refurbishment. Whilst these are simple positional points they begin to demonstrate that the demand for new homes is probably not as easily dismissed as some would suggest.

AiY(D)

[Mike4]

Figure 2.2 is revealing. The UK’s housing stock is reasonably old. Whilst older homes can have some insulation fitted to improve their heat loss this doesn’t bring an old home even close to a new when comparing heat loss.

No kidding! Mine was built in 1700 and there is precious little chance of it being demolished and a new one built.

It's an interesting point though. ISTR reading that in USA or somewhere like that, a house is considered to be worn out at 50 years old and no-one thinks twice about clearing the site and building a nice, new, up-to-date new one.

Can you imagine the furore if I applied to the Planning Committee to do that to mine in this remote Wiltshire village conservation area?!

[Lootman]

Figure 2.2 is revealing. The UK’s housing stock is reasonably old. Whilst older homes can have some insulation fitted to improve their heat loss this doesn’t bring an old home even close to a new when comparing heat loss.

No kidding! Mine was built in 1700 and there is precious little chance of it being demolished and a new one built.

It's an interesting point though. ISTR reading that in USA or somewhere like that, a house is considered to be worn out at 50 years old and no-one thinks twice about clearing the site and building a nice, new, up-to-date new one.

Can you imagine the furore if I applied to the Planning Committee to do that to mine in this remote Wiltshire village conservation area?!

True although most US housing is made of wood. And that tends to rot even if pressure treated. So when you buy a home in the US you order a "pest report". Basically you are looking for termites, dry rot etc. as that can literally cause your house to collapse.

Not so much with stone or brick, although lucky we do not have earthquakes here.

In Hong Kong they seem to demolish buildings after about 25 years.

You got me beat though. My oldest house was only from 1762. Newest was about 1910.

[Mike4]

You got me beat though. My oldest house was only from 1762. Newest was about 1910.

You have me beat at the upper end though. Newest I've ever owned and lived in (as adult) was 1920.

BTLs don't count, may I propose!

[Lootman]

You got me beat though. My oldest house was only from 1762. Newest was about 1910.

You have me beat at the upper end though. Newest I've ever owned and lived in (as adult) was 1920.

BTLs don't count, may I propose!

Good point, I think a couple of my BTLs were from 1930s to 1970s. But usually conversions from older buildings. Certainly have never bought a new build, or similar.

[Nimrod103]

Figure 2.2 is revealing. The UK’s housing stock is reasonably old. Whilst older homes can have some insulation fitted to improve their heat loss this doesn’t bring an old home even close to a new when comparing heat loss.

The objective must be to minimise the use of fossil fuel derived energy. So is it more efficient to leave an old house standing and heat it, or demolish it and replace with a usually shoddy but energy efficient house?

[CliffEdge]

Building loads of new houses is the usual stupid short term thinking we seem to be lumbered with in this country.

[Mike4]

Building loads of new houses is the usual stupid short term thinking we seem to be lumbered with in this country.

Indeed. Build a load more houses and it just drives the price of accommodation down slightly so those of us who can afford it will buy more of it and live in even more space and comfort.

That's what I see happening anyway.

It won't help the homeless sleeping on the pavement around Birmingham railway station every night get any closer to buying a house with a £250k mortgage.

[CliffEdge]

Building loads of new houses is the usual stupid short term thinking we seem to be lumbered with in this country.

Indeed. Build a load more houses and it just drives the price of accommodation down slightly so those of us who can afford it will buy more of it and live in even more space and comfort.

That's what I see happening anyway.

It won't help the homeless sleeping on the pavement around Birmingham railway station every night get any closer to buying a house with a £250k mortgage.

Yes and of course energy inefficiency will be irrelevant in 20 years time.

[Nimrod103]

Building loads of new houses is the usual stupid short term thinking we seem to be lumbered with in this country.

Indeed. Build a load more houses and it just drives the price of accommodation down slightly so those of us who can afford it will buy more of it and live in even more space and comfort.

That's what I see happening anyway.

It won't help the homeless sleeping on the pavement around Birmingham railway station every night get any closer to buying a house with a £250k mortgage.

Are they living on the streets because they have to, or because mental, drug or other issues put them there?
Presumably if the Govt are under an obligation to find beds for illegal immigrants they can find beds for those Brits who you say sleep on the streets? Maybe the people you refer to would be better off in an institution?

[vand]

Building loads of new houses is the usual stupid short term thinking we seem to be lumbered with in this country.

Maybe you think we should be demolishing the supply of housing instead?

I agree that the more layers to the affordable housing question than just "build more houses" but it will absolutely help.. unless you are trying to refute the laws of supply and demand.

[tacpot12]

Building more homes is part of the solution, as the homes will be better insulated that the existing stock. However, only the wealthiest will be able to afford new homes, but at least shoudl cause the houses with poor energy performance either to decrease in value or not increase in value - although I remain amazed at the British public's willingness to pay very large sums (compared to their salaries) for homes with very poor energy performance.

But we have to get better at insulating our existing homes. Most of the housing stock can be improved substantially, although insulating under solid floors will always be impossible. But the cost of doing so is are significant. While people are overpaying to buy the home, they can't borrow more money to insulate it properly. Generally the best way to insulate old homes is to apply insulation to the exterior and install a new roof on the property so that the roof sits properly on the wider walls - fortunately most older houses also need a new roof, so the two jobs can be combined to make a good solution, but at a very high cost.

[vand]

Building more homes is part of the solution, as the homes will be better insulated that the existing stock. However, only the wealthiest will be able to afford new homes, but at least shoudl cause the houses with poor energy performance either to decrease in value or not increase in value - although I remain amazed at the British public's willingness to pay very large sums (compared to their salaries) for homes with very poor energy performance.

But we have to get better at insulating our existing homes. Most of the housing stock can be improved substantially, although insulating under solid floors will always be impossible. But the cost of doing so is are significant. While people are overpaying to buy the home, they can't borrow more money to insulate it properly. Generally the best way to insulate old homes is to apply insulation to the exterior and install a new roof on the property so that the roof sits properly on the wider walls - fortunately most older houses also need a new roof, so the two jobs can be combined to make a good solution, but at a very high cost.

Struggling to understand your reasoning for the claims that only the already rich will be able to afford new home. If supply of housing increases then, other things being equal, prices will fall. If you mean that the demand is highly inelastic and price will only respond by a small amount - that is indeed possible.. so what, you build even more housing in that case. At any rate I don't believe that is true of the UK market given the taxation on additional properties in place today.

If you mean new housing commands a significant premium to existing stock, well it does a little for similar size footage, but new builds are inevitably smaller and the small premium is expected due to expected lower maintenance costs.


In any case I think you are making far too much about the cost of energy for UK households - heating bills have, last year apart, generally trended down as a percentage of household income over time. UK households also are quite low in total energy consumption when placed alongside countries like US, Canada and Aus.

[stevensfo]

Building more homes is part of the solution, as the homes will be better insulated that the existing stock. However, only the wealthiest will be able to afford new homes, but at least shoudl cause the houses with poor energy performance either to decrease in value or not increase in value - although I remain amazed at the British public's willingness to pay very large sums (compared to their salaries) for homes with very poor energy performance.

But we have to get better at insulating our existing homes. Most of the housing stock can be improved substantially, although insulating under solid floors will always be impossible. But the cost of doing so is are significant. While people are overpaying to buy the home, they can't borrow more money to insulate it properly. Generally the best way to insulate old homes is to apply insulation to the exterior and install a new roof on the property so that the roof sits properly on the wider walls - fortunately most older houses also need a new roof, so the two jobs can be combined to make a good solution, but at a very high cost.

Struggling to understand your reasoning for the claims that only the already rich will be able to afford new home. If supply of housing increases then, other things being equal, prices will fall. If you mean that the demand is highly inelastic and price will only respond by a small amount - that is indeed possible.. so what, you build even more housing in that case. At any rate I don't believe that is true of the UK market given the taxation on additional properties in place today.

If you mean new housing commands a significant premium to existing stock, well it does a little for similar size footage, but new builds are inevitably smaller and the small premium is expected due to expected lower maintenance costs.


In any case I think you are making far too much about the cost of energy for UK households - heating bills have, last year apart, generally trended down as a percentage of household income over time. UK households also are quite low in total energy consumption when placed alongside countries like US, Canada and Aus.

In any case I think you are making far too much about the cost of energy for UK households - heating bills have, last year apart, generally trended down as a percentage of household income over time. UK households also are quite low in total energy consumption when placed alongside countries like US, Canada and Aus.

I'm not surprised. Have you seen the size of new houses in the UK? Apparently, the housebuilders even use special 'dolls-house' furniture for the photos. A few years ago, I read the average house in the UK is the smallest in Europe. Many houses in the UK have a loft, which is not expensive and safe to insulate, especially if they're not using that awful fibreglass stuff. So energy consumption should be given per cubic metre to get a better idea of efficiency. The Germans have houses now that barely requiring heating at all.

Years ago, we bought a house in Stevenage and it was very new, and looked nice, but scratch the surface and it was terrible quality. Everything done on the cheap, then covered with nice glossy paint. The heating system had taken no account of the very hard water, so everyone was ripping out their systems and putting in traditional ones. So more pollution, waste, rubbish etc.

I dare say it's quite cheap to heat a rabbit hutch.

Steve

[vand]

Struggling to understand your reasoning for the claims that only the already rich will be able to afford new home. If supply of housing increases then, other things being equal, prices will fall. If you mean that the demand is highly inelastic and price will only respond by a small amount - that is indeed possible.. so what, you build even more housing in that case. At any rate I don't believe that is true of the UK market given the taxation on additional properties in place today.

If you mean new housing commands a significant premium to existing stock, well it does a little for similar size footage, but new builds are inevitably smaller and the small premium is expected due to expected lower maintenance costs.


In any case I think you are making far too much about the cost of energy for UK households - heating bills have, last year apart, generally trended down as a percentage of household income over time. UK households also are quite low in total energy consumption when placed alongside countries like US, Canada and Aus.

In any case I think you are making far too much about the cost of energy for UK households - heating bills have, last year apart, generally trended down as a percentage of household income over time. UK households also are quite low in total energy consumption when placed alongside countries like US, Canada and Aus.

I'm not surprised. Have you seen the size of new houses in the UK? Apparently, the housebuilders even use special 'dolls-house' furniture for the photos. A few years ago, I read the average house in the UK is the smallest in Europe. Many houses in the UK have a loft, which is not expensive and safe to insulate, especially if they're not using that awful fibreglass stuff. So energy consumption should be given per cubic metre to get a better idea of efficiency. The Germans have houses now that barely requiring heating at all.

Years ago, we bought a house in Stevenage and it was very new, and looked nice, but scratch the surface and it was terrible quality. Everything done on the cheap, then covered with nice glossy paint. The heating system had taken no account of the very hard water, so everyone was ripping out their systems and putting in traditional ones. So more pollution, waste, rubbish etc.

I dare say it's quite cheap to heat a rabbit hutch.

Steve

Yes, our homes are smaller than those other countries mentioned so energy costs per household should absolutely be proportionally lower - that's not really a secret, or a new thing.
I can't vouch for the quality of new builds - I am sure there are horror stories regarding shoddy workmanship, but at least they are build to modern standard, with new codes in place for insulation and heat loss etc and if they are really substandard and need reworking they should all be covered by a 10yr gaurantee.

[Lanark]

Generally the best way to insulate old homes is to apply insulation to the exterior and install a new roof on the property so that the roof sits properly on the wider walls - fortunately most older houses also need a new roof, so the two jobs can be combined to make a good solution, but at a very high cost.

The danger with applying too much insulation to older homes is you end up with damp, the Peter Ward channel does a good job of explaining the issues
https://www.youtube.com/@WarmDryHome/videos

[CliffEdge]

There's always a demand for new house building but there is no need. There is a great need for a change in attitudes towards dwellings.

[scrumpyjack]

Years ago, we bought a house in Stevenage and it was very new, and looked nice, but scratch the surface and it was terrible quality. Everything done on the cheap, then covered with nice glossy paint. The heating system had taken no account of the very hard water, so everyone was ripping out their systems and putting in traditional ones. So more pollution, waste, rubbish etc.

I dare say it's quite cheap to heat a rabbit hutch.

Steve

It can be as bad in France. I remember my brother and I, in 1987, were looking at buying a ski apartment in Morzine. We are both over 6 foot and had difficulty standing up in one new build we looked at. As for cramped - it made our current new builds look positively spacious. At least we have some building regs. I guess the french system revolves around brown envelopes to the mayor!

[Mike4]

If supply of housing increases then, other things being equal, prices will fall. If you mean that the demand is highly inelastic and price will only respond by a small amount - that is indeed possible.. so what, you build even more housing in that case.

But "other things" surely are not equal. For prices to fall new home building would, for a start, have to outpace the inexorable rise in the population. Both indigenous and from immigration. Also the gradual increase in wealth of the population as a whole leads to higher demand for accommodation, even if the population remained static. There are probably other upward pressures on the demand side too.

[AsleepInYorkshire]

If supply of housing increases then, other things being equal, prices will fall. If you mean that the demand is highly inelastic, and price will only respond by a small amount - that is indeed possible.. so what, you build even more housing in that case.

But "other things" surely are not equal. For prices to fall new home building would, for a start, have to outpace the inexorable rise in the population. Both indigenous and from immigration. Also the gradual increase in wealth of the population as a whole leads to higher demand for accommodation, even if the population remained static. There are probably other upward pressures on the demand side too.

Land prices are a large driver of house prices. Land owners do not sell their land for less than the market value. Land probably accounts for 20% of the overall costs of a new home. Throw in the infrastructure needed for the new homes and [quick back of the pad working] you're probably starring down the barrel of 30-35% of the costs to build. Developers do need significant margins to stack up the risk reward ratio and as a generalisation they will want more than 25% margins to advance to construction phase just based on risk cover.

In the late 1980’s when I was preparing appraisals for the Yorkshire office of the third largest volume builder the benchmark’s to purchase land was a minimum of 18.5% margin (on house sale price) and a ROCE that exceeded 40%. All appraisals to purchase land had to be signed off by the CEO. It was the ROCE that was always the issue. It was set at this level to maximise cashflow and reduce work-in-progress. At the time Barratt were working to much lower margins.

When the total cost of building a new home is viewed there’s a veritable herd of “hangers-on”. Fees for building control, planning, desktop studies, NHBC (or the like) cover. Sales offices and show homes all neatly furnished. Insulation has increased significantly in the last 30 years. New homes, indeed, new buildings must also be well sealed to prevent draughts. They are pressure tested to prove they meet a standard.

All these costs are driven by the salaries of those who participate in taking a building site from conception to completion.

I have relied on construction to earn a living. My long-standing and somewhat frustrating mental health issues to one side I’ve earned a decent income (when working). But, and again the caveat of my intermittent work history due to health to one side, it’s a famine and feast industry. A roller coaster. Demand isn’t consistent. And there’s no reason for the industry itself to create this. The conclusion is simple, it must be driven by external forces.

Land prices may soften from time to time, but they aren’t going to come down in substantial chunks. Demand for most new homes is based on location. People are prepared to commute to obtain affordable homes, but I suspect most will pay more for a home within walking distance of their children’s school.

I focused this thread on insulation. Not I hasten to add that I’m precious about where it wanders off. Often when a thread diversifies the conversation remains interesting and thought provoking. Unless it’s me jabbering on . Quick diversification. In the past I've apologised for this behaviour. Would you mind if I didn't anymore. Embarrassingly it's a classic symptom of my condition . If we assume that, generalising, there’s a lack of insulation in the UK’s homes, and obviously setting aside Mike’s 18th Century converted pub (sorry for the poor joke – tongue in cheek), and other homes which can’t be insulated to a high standard, the UK has a problem. It has to heat it’s homes and to do that means significant investment in power infrastructure. And I would suggest we only have two sources for this. Nuclear and wind. That decision is made for us if we want to reduce our carbon footprint. Both will need more investment.

Someone somewhere will be looking at the costs of new infrastructure and comparing that to the costs of improving our housing stocks insulation.

Absolute pure speculation and perhaps total rubbish but I just wonder if ultimately we will have to start considering demolition of some homes, particularly the older stock. The back-to-back terraces which seem to survive in many of our cities as an example. As I’ve said I could be going down a brain fart cul-de-sac with my thoughts. At the very least we need to know about how our demand for heat will impact our carbon footprint and if it’s more cost effective to build new homes where old stood, instead of “more” very costly infrastructure. I suspect there’s a choice to be made but I can’t find any numbers to suggest which way we will have to take.

We have a two party first past the post democracy. I accept there are other parties which we can vote for to. But for the most and keeping my point simple our choice is Conservative or Labour.

Labour have said they will build if they get into power. I’ve not looked for the detail in that statement. I think Labour have said their target is 300,000 new homes per year. I saw a number of 1.5 million touted on one of their fliers so that seems to be their target. It’s the same as the Conservatives. I don’t think either party has any latitude on the numbers that are built and the UK’s choice for which energy infrastructure and energy independence we make.

We do need to build though. And I have no pigging idea how to make new homes any more affordable. I sort of wish I did. We will need more skills too. We haven't trained the skills we need. I think it's worth talking about this as I believe the lack of training within the industry has been causing major inflationary issues when building.

I use a simple barometer for measuring labour inflation. If the bricklayers are demanding and receiving 20-30% increases and working a four-day week the economy will be very close to a significant adjustment. Three years ago bricklayers pay rose by at least this amount. At this point the clock was ticking down to interest rate rises and a reduction in the number of new homes coming to the market.

For those who are more independent regarding their choice of investment I think there will be some medium-term gains in infrastructure and building stocks. I’ve just focused on build and build materials at the moment. And with heavy caveats and genuine humility energy infrastructure may be worth a review. A final caveat, if I may please, I am not trying to teach anyone how to suck eggs. I’m simply chatting. Or as those who are closest to me offer in feedback, I’m jabbering . It’s how my little grey cell functions, or if you prefer doesn’t function .

Take care Fools

AiY(D)