case On the supply side, fewer houses are being built as shown Figure 3 on the next page. Possible reasons for this are THE HOUSING MARKET as follows: . Smaller builders have been hit hard by the recession and In 2007, construction companies Taylor Woodrow and a lack of bank finance, meaning they have found it difficult George Wimpey, joined together in a merger to form Taylor to buy land and deal with the often costly and time- Wimpey to become the largest housebuilder in the UK. This consuming planning system. was an example of the consolidation that has been taking . Resources in the construction industry are being stretched. place in the housebuilding market since the 1980s. In 1988 Other projects, such as roads, schools, hospitals and railways the 25 largest housebuilders shared about 37 per cent of the are competing for resources. Some construction companies market. By 1999 this had risen to about 55 per cent. In 2015 have found it difficult to recruit skilled workers, for example. the top 10 companies had about 60 per cent of the market . Some of the big housebuilders are being very cautious, and Persimmon, Barratt and Taylor Wimpey dominated following the financial crisis and the recession in the UK. about 25 per cent. Just after the Taylor Wimpey merger They are planning a more measured growth strategy and the Office of Fair Trading carried out an investigation into are returning money to shareholders. the industry but found 'little evidence' of anti-competitive behaviour by housebuilders and 'no evidence' of monopolies. The housing shortage has prompted a small measure of action However, Rob Perrins, managing director of upmarket builder from the goverment. A Help to buy equity loan scheme Berkeley, says of the big companies: They're too powerful... was introduced, with the first phase starting in April 2013 in They haven't wanted to be that dominant, but small England. This saw the government offering a 20 per cent equity builders are just not there at the moment.' In contrast to the loan to buyers of newly built properties. These buyers must strengthening of big housebuilders, the number of small and offer a 5 per cent deposit. The government also sought to help medium-sized developers has dwindled. In 1988 two-thirds smaller developers by launching the 1500 million Builders of all new homes were built by developers with an annual Finance Fund, which provides loans to small housebuilders. output of fewer than 500 units. By 2012 that was down to less than a third. There is currently a housing shortage in the UK. This is reflected in the price increases shown in Figure 2. However, the graph shows that the price increases are not evenly distributed around the country. Demand for housing outstrips supply. There are several reasons for the rise in demand. . The UK population is growing - it is around 64 million at the moment, but is forecast to grow to around 70 million by 2030. Some of the population growth is due to migration from parts of Eastern Europe as more countries join the EU. . A significant number of houses are being bought up by property dealers in the 'buy-to-let' market. This means there are fewer properties left for other buyers. People are delaying marriage, which means that there are more single people looking for property. The population is aging so more properties are needed because people are living for longer and people are living in their houses for longer. . Foreign investors have stepped up their demand for property - particularly at the high end of the market, and especially in London.In 2015, interest rates in the UK economy were still at an historic low and there were signs that the government would Fig continue to encourage more house building. For example, it All announced the development of a new eco-town in Bicester, Oxfordshire, which would provide around 6,000 sustainable new houses. The first phase of this development would see the construction of energy-efficient, zero-carbon homes, creating the UK's first true zero-carbon community. The plan is to keep the environment at the core of the project, Northe adopting cutting-edge technology and ensuring that the provision of green space in the community is key. Yo Builders in the construction industry have also seen signs East are being joy of recovery with reports in indicating that builders in West and the recentin the the FTSE 350 saw their highest revenues for five years sured grove tos in 2014. However, it still faced difficulties. The industry holders is the biggest producer of waste in the economy and is dosely regulated. In 2013 there were 42 fatal injuries in ted a smal memad construction and around 5,000 injuries, which showed buy equity loan co that the health and safety issues were still a concern. Sou use starting in April2 Suitable land was difficult to obtain and there was nit offering a 20 prax increasing regulation relating to the UK's commitment to vertiex These logs build zero-carbon homes. Fig How vemment ole sight Source: adapted from the Financial Times 28.07.14, o E500 million Ask 27.01.15. All rights reserved. 12