Sir Oliver Letwin's draft report acknowledges the realities facing thehousing sector. He recognises that it is in the developers' interests tocomplete as many house sales as soon as possible. Indeed it is these sales thatfund the next stage of development or another site. Land acquisition is thedeveloper's life blood and key to their strategy. Land banking is not avaluable exercise for housebuilders – it is a necessary resource. The reportdoes however focus on the issue of market 'absorption rate' – the propositionthat certain housing products are drip-fed into a local market to sustainprice, but which pace is symptomatic of larger sites, which are naturallyslower to come out of the ground.
Whilst the Government's policies have recently driven larger settlements(i.e. the Garden Village initiative) the analysis now reveals that it is thatscale which is inhibiting the variety necessary to increase build out rates.The financial crisis saw smaller developers priced out of the market - theycould neither secure development finance nor achieve the economies of scale.They are slowly re -emerging but while they can provide some of that varietythere is a long way to go before SMEs will have any significant influence. Thekey appears to be incentivising multiple-outlets and more variety ofhouse-types on larger sites – but the report recognises developmenteconomics is highly sensitive to policy intervention and we await detailedrecommendations in the Autumn final report.
Collaboration is part of the solution between all parties involved, and whataĺl parties are determined to avoid are knee jerk responses that could resultpoor quality, unsustainable schemes. Considered placemaking does take more timeand also involves, quite rightly, discussions with local communities.
Flexibility of construction is another response. Established developers aswell as new entrepreneurs are looking at offsite modular constructionboth for speed and a way to overcoming an over reliance on one material –bricks!