1. Housebuilding in the South East
Developing. Slowly.
Alastair Stewart

2. 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

3. 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)

4. 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

5. 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

6. 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?

7. 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

8. 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

9. 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?

10. 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!