Housebuilding in the South East Developing. Slowly. Alastair Stewart

Housebuilding: the game is changing Affordability: something has to give Slow(ing) growth from housebuilders RSLs constrained by government ideology London time-bomb, South-East aftershocks Build-to-rent picking up Off-site no longer off the wall Government policies

Affordability: stretched to breaking point? South East breaking out Lack of supply? Wrong stuff Wrong price Too much Over-supply of money Asian investors “Free money” Government subsidies It’ll end in tears (for some)

London time bomb 60,300 units under construction 149% higher than 2007 peak Most sales “off-plan” overseas Delivery crisis “Distressed” sales and re-plans Collateral damage? New mayor, new model likely “Streets not Towers” Source: Molior London

Volumes: pedestrian under current model Modest ambitions from housebuilders “Optimal size”, sales rate, capital efficiency, risk Skills shortages in South East RSLs paralysed by government actions Rent cuts, R2B2, on government balance sheet, ideology

Housebuilders: a problem, not solution? Profits and shares fuelled by Help to Buy (see right) … but not volumes Focus on margins and balance sheets Special dividends Pushing up land values Only show in town for government?

Build-to-rent: a game changer? “Generation Own, not Generation Rent”? Need for 1.1 million new rented homes (Savills) Tax changes will drive out amateur BTL Large scale investors to fill gap US giants hunting ($22trn asset class in US) … Greystar, Grainger, Fizzy Living, L&G, Essential Living Totally new model

Off-site: going for volume Laing O’Rourke: 2D then 3D L&G invests £55m Game changer for costs … … but we’ve been there before More investment and tech now Time wasted in manufacturing vs construction

RSLs: thinking big Top 10 to build 53,000 units, 2015 - 18 Early movers in Build-to-Rent Mega-mergers: Affinity Sutton & Circle (127,000 homes) Sovereign & Spectrum (56,000) TVHA & Genesis (47,000) Diversification. RSL as fund manager. A quoted housing association?

You don’t know what you’re doing! Most interventionist government yet H2B, SHI, R2B2, Pay-to-stay, RSL curbs etc Law of unintended consequences Help to Buy to backfire Rule by Think Tank Intervention by Governments almost always goes wrong!