Profit and loss

Through boom and bust, the problem of low housebuilding numbers has remained stubbornly impervious to all efforts to resolve it. We’re currently building about half of the 240,000 homes the country needs to house its young people and create a stable market for the future, and the latest data shows the rate is dropping further.

Why is this? A comparison of the top eight listed housebuilders might give part of the answer. It shows that while profits have soared in the last year, volume hasn’t. It’s a crude comparison, yes, but the point is they can’t anymore blame their balance sheets for low numbers. Rather they are making perfectly rational business decisions that it’s not in their interests to rapidly ramp housing numbers.

And this isn’t to have a go at volume housebuilders. They still face huge problems in the shape of continued mortgage lending constraints, sites that aren’t economically viable, and growing regulatory burdens. Let’s be realistic: they are private companies whose purpose is to make money, not charities with a mission to solve the UK’s housing need.

But it leaves the government, and the nation, with a poser. If the housebuilders won’t jump in to fill the 100,000 homes-a-year hole, who will? So far the government’s attempts to answer this question, by underwriting loans and handing out cash to unlock stalled sites, have been worthwhile but not really got to grips with the scale of the problem. NewBuy is a welcome step forward, but its teething problems need to be ironed out fast, and mortgage lenders need to be put under serious pressure to make their rates more realistic.

But ultimately, more investment is likely to be needed from the government, otherwise build rates will continue to fall. This may be a penny that has dropped. Statements from David Cameron and Nick Clegg in the last week have made it clear the Treasury has been ordered to make government guarantees available to back key housing and infrastructure projects - as should have been done at least a year ago. If rolled out swiftly, this intervention could make a difference. It can’t come
quickly enough.

Joey Gardiner, assistant editor
               

Architects need more than style

Architects’ lack of business acumen will surprise few in the industry, least of all architects. Statistics revealed by the RIBA’s latest business benchmarking report appear to confirm the stereotype that the average practice neglects the nuts and bolts of running a successful company because they are more concerned with peer recognition or with the higher calling of improving the world through good design. But within this trend lies an opportunity. There are many firms, Building’s Architect of the Year AStudio among them, which see no contradiction between entrepreneurship and innovative design and are as a result beating the competition. There is also suddenly something to play for with workloads expected to rise for the first time in years. Now there’s just that tricky issue of public sector procurement to sort out …