Report: How to increase competition, diversity and resilience in the house builder market?

By: Europe Economics  Published: April 2014


The housebuilding sector has become increasingly concentrated in recent years with firms that build over 2,000 units per year accounting for around 50 per cent of housing starts. In order to address the unresponsive nature of housing supply, six potential policies have been developed that centre on alleviating key barriers faced by housebuilders. Some of these options are likely to be more beneficial to SME builders by addressing barriers to growth and entry, such as problems associated with land acquisition, finance and procurement. Others are likely to have more pronounced effects on larger housebuilders, for example by increasing incentives to build out sites faster.

Summary

There are many issues that need to be addressed in order to improve the responsiveness of housing supply. One factor that is often cited is competition: the Barker Review of housing supply, for example, noted that housing supply responsiveness is potentially affected by the degree of competition in the residential construction industry. Shelter has commissioned Europe Economics to provide analysis in support of policy recommendations which seek to address some of the barriers to growth faced by existing firms and barriers to entry for potential entrants, with the ultimate aim of increasing competition, diversity and resilience within the housebuilding sector.

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