Urban Splash House
Could prefabricated housing, like Urban Splash's hoUSe development, become the modern-day 'dream home'?

COMMENT | Paradigm shift to fix broken housing market

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Phil Nunn Blackmore GroupA new era of ‘dream home’ ownership is coming, and it’s about time, writes Phillip Nunn of The Blackmore Group.

The economics of home ownership is fundamentally broken. Take a family of four – two adults on average incomes raising two children. They can afford to buy a moderate family home, right? Wrong. In many parts of the UK, house prices are now more than six times what they should be. The only way that will reverse itself is if house prices are halved or family incomes double. My money isn’t on either of those things happening anytime soon.

Let’s look to developers and estate agents. They have a vested interest in maintaining the housing market and most believe that it will swing back into action due to excess demand for housing.

But this belief is fundamentally flawed, because the desire to want to be a homeowner isn’t matched by a market where that demand can be met. The cold hard fact is that housing is no longer affordable. While there is some market activity, it’s largely amongst those already on the property ladder – upgrading or downsizing. The issue is that very few people can get anywhere near the bottom rung of the ladder. It’s going to take something seismic to get that swing.

Looking back, there was a time from the early 1960s to 2008, which was largely perceived as the ‘golden era’ of home ownership. It was a time that saw a whole generation of now-retirees able to get a mortgage, pay it off and own their homes.

But during this so-called ‘golden era’, there operated a dysfunctional banking system which, since the crash, has been in a perpetual state of default. It’s destroyed the home ownership dreams of the generations that follow our parents and grandparents.

The new era of home ownership

There is hope, however, but the whole industry needs to think carefully about its next move to avoid the pitfalls of the broken housing market.

We’re now entering a hugely critical time in global economic history and it’s vital that we are open to and really embrace change. Technology is allowing and enabling us to design and build new and beautiful, energy efficient homes which are built to high spec in factories. They have all the wiring, plumbing and even decorating completed in factories and can be delivered ready to assemble in just days or weeks on site.

This modern-day prefab, a designer eco pad allowing ready-made home ownership to become reality, will enable people to buy a new era ‘dream home’. They come at a fraction of the cost, and in a fraction of the time, as traditional bricks and mortar homes. As funding is piled into this new sector and our government eases planning laws to allow these new designer eco homes to be built, we will start to see the emergence of affordable housing appearing on a large scale across the UK and wider western world.

The end of pre-existing housing?

While this will be hugely beneficial to anyone wanting to get on that first rung of the property ladder, it does throw something of an elephant in the room too. What becomes of the housing stock owned by the millions of people already on the ladder?

The implications for the domestic housing market are profound. People’s homes will appear to be staggeringly expensive when compared with this new era of homes. Think about it, who wants an old, potentially energy-sapping house, when they could have a bespoke and eco-friendly home faster – at half the price?

These new-era homes are likely to cause a shift in the market and those owning a house for more than a decade will see their paper-based gains evaporate.

The danger is that anyone who has entered the market in recent years is at risk of being left with permanent negative equity as the market for pre-existing housing is eliminated. Others argue that the demise of pre-existing housing is inevitable also, but some way off.

This new era is here. There are examples of a UK off-site construction industry emerging. Legal & General has set up L&G Homes in a factory near Leeds to build up to 4,000 prefab homes a year. High-quality prefabricated technologies also have an important role to play in extending educational sites, for example with Atkins’ Lime Tree Primary Academy in Sale, Trafford – a creative and bespoke forest school design that prioritises outdoor learning.

Let’s embrace this paradigm shift as we move forward into this new world of property investment and ownership.

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  • Phillip Nunn is chief executive at The Blackmore Group, a Manchester-based investment house specialising in property

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1. Pre fab / eco homes will unlikely come to market at prices lower than the existing equivalents in terms of size and location
2. Existing stock will not become undesirable nor be more vulnerable to negative equity. Heritage homes and design led new schemes are and will remain desirable regardless of utility bills costing £100 pcm less

There is little that I agree with in this article other than that pre fab is a great innovation. It doesn’t make anything else redundant though.

By dave

We’ve been struggling for years to make off site housing cost the same as ‘traditional’ build schemes. If it is to take off in Britain there needs to be a carrot and stick approach from the government. Better environmental standards were never voluntarily adopted by the industry until they were put into building regulations. Social housing needs to lead the way for off site assisted by the government. A agreed suite of standard house plans and specification that all manufactures can work to would help enormously. Companies cant set up factories based on pilot schemes of 20 houses, they need guaranteed volume. Public sector procurement rules make it virtually impossible to select a supplier at an early stage and work with them. Again the government could help by tendering suppliers on a national basis and require housing associations to purchase from them only. Volume of orders and a guaranteed work stream for the factory reduces costs.

By Jim McMillan

Pre-fab has been around for decades and has changed nothing. Those pictured were slower than traditional construction, and have designer price-tags. The paradigm shift needs to be political – that will involve persuading millions of voters to stop thinking of land and housing as an investment opportunity. Until there’s the political will to intervene in the market, the status quo will prevail.

By Jonty

This is still at the ‘early adopter’ stage, with the HoUSe development effectively being sold at a premium. Agree it needs the public sector to lead the way here to get economies of scale for this to be properly tested in the ‘mass market’ – I don’t hear enough noise from gov’t to make me think this will happen though, sadly…

By JoeJ

Presumably this new breed of fantastic technological ecohome will also be able to levitate and so break the link between house prices and land value?

By Unaplanner

Beautiful??? Have you seen the HoUSe scheme?

By The Realist

What an odd article. Prefabs have been around for decades and have solved nothing. Let’s see the author try to get a mortgage on one. Or perhaps take a Ryanair flight to Germany and see how planning should work.

By Peter Black

This seems way off the reality of where most other commentator’s thinking is. Perhaps Philip is trying to be the Elon Musk of the property sector? Well over 50% of the 25 million houses in the UK are owner occupied and majority of people will not sell to move into a prefab. It will take generations to make the changes that Philip is talking about. Simply it wont happen. Prefab are great solutions for certain sectors (young, starter family homes, social housing) but majority will want to move up the ladder. The ladder will not just disappear albeit the structure of the market will extend and develop new niches. As the baby boomers die, the housing wealth will get recycled into the next generation. None of this even mentions the scarcity of land – God isn’t making any more land anytime soon.

By derek duval

It all come back to land. The volume developer business model and construction practices are uniquely adapted to the characteristics of the land market in this country. That said, L&G must have their eye on a big market for their flat pack product given the size of their investment. Things will evolve gradually slowly and progressively but it won’t be a paradigm shift in my opinion.

By Interested observer

The problem of manufacturing homes has never really been the problem. In the past if we wanted more homes we just allocate more people to work on them but prefabs will help with resolve the crisis once we decide to fix it.

The real problem is land with planning permission. If you have land that likely to get planning permission or already has permission you will want to get the maximum amount of return for it. So if you are the only supplier or one of few suppliers you naturally do not want to flood the market and create competition which will loss you money. Therefore you need to deliver the homes at a rate the market will not be flooded and you get maximum return.

Building quickly therefore is great to reduce costs and staff needed but does not in itself increase the build rate.

The only true answer is to increase competition between land owners. In area like London it means both putting up the density (more homes per hector) and supplying extra land(outward expansion).

The first option upwards is extremely limited as most land is already used. You have to take out large area out use for a time being to regenerate. For example elephant and castle; very upsetting for the displaced provides little political benefit as unpopular and land is already expensive; therefore few projects can be afforded as once.

The second option expansion; we have a very popular urban containmemt policy (greenbelt) designed to prevent this. This policy is well defended by both main. Parties and the core supporters (baby boomers) and is unlikely to change. However let’s look at what could happen if we had parties willing to deal with the issues.

Most of greenbelt is just farmland has no meaningful environment benefit and purely their to prevent housing. Only a few percent could create competition within the land market to force down the land price and by doing so increase profits to builders; since builders motives are not high house prices but profits they will be able to increase output. With a policy including competition between builders you you can break the monopoly.

By Alan

The fact is that these pre-fab homes will be built in secondary less desirable locations where values are lower and more affordable. If he is moderately correct about the expansion of pre-fabs, all this will do is create a two tier system.

Ultimately value is driven by location. People will pay more to live in a nicer area. Whether it is a card board box or a 5 bed executive house. Unless there are plans to bulldoze 200 houses surrounding Hale, Didsbury, Alderley Edge or other prosperous desirable villages and erect pre-fab homes then this argument doesn’t hold.


I doubt releasing more land will increase competition in the land market since landowners are under no obligation to sell and will likely hold out for the best price still. The only real solution is decouple as much as possible the land buying process from building and legislate to do that or legislate to smash the stranglehold of the largest volume house builders on the market. In no other developed country would such a concentration in the supply of housing be tolerated.

By Interested observer

@Jim “Public sector procurement rules make it virtually impossible to select a supplier at an early stage and work with them”. Could public sector clients not tender a long term framework agreement for provision of offsite products?

By Interested observer

What are “public sector procurement rules”?

By Pointlessly Curious of Liverpool