News and Press releases

Back to the Future

13/10/2009
After months of doom and gloom on the economic front, there have been encouraging signs recently that those famous green shoots of recovery that everyone has been anxiously waiting to see are beginning to sprout up here and there. The FTSE has a healthier look to it, house prices are gradually moving in the right direction again after tumbling in a downward spiral and employment analysts say the jobs market is in its healthiest state for eighteen months. Throw into the mix the fact that consumer confidence is also on the up and it may seem that happy days are indeed here again. Not so fast, though. For all the bullish noises being made in some quarters, there remain plenty of bears out there who have yet to be convinced that the worst of the recession is behind us. According to them, the light at the end of the tunnel could yet be a train and only time will tell which of the opposing arguments eventually proves to be the right one. It’s amidst this maelstrom of economic uncertainty that housebuilders have to plan their strategies for the future. Forward planning when you have a fair idea of what’s round the corner is difficult enough. Forward planning when no-one appears sure of what lies ahead takes on a whole new degree of difficulty. Builders face a myriad of imponderables. How can the market be given the shot in the arm it needs? If demand does increase what type of houses should be built? Given current circumstances, do housebuilders stick by tried and tested methods or do they have to be even more creative than they have in the past when building and kitting out their houses? Is there an argument for some retro and maybe even revolutionary thinking? Start all over again with a blank sheet of paper, go back to square one, cut out all the frills and extras and simply make the properties more affordable. All of these questions, and more, have been occupying the minds of builders the length and breadth of the country, including Mactaggart & Mickel as the company’s Sales & Marketing manager Joanne Casey explains. “We offer a range of sales initiatives on selected plots, including Rent-to-Buy and My First Home shared equity scheme, meaning that our houses can continue to be built to the highest specification, with no cutbacks, while remaining at realistic prices. “When it comes to the use of new technology and innovative building processes, Mactaggart & Mickel have invested significantly in the design and construction of our homes as part of an on-going R&D project. “We recently unveiled the most sustainable home in Scotland built by a commercial housebuilder, designed to save 75 per cent a year on heating bills. “The house, which is located at our Balgarth development in Ayrshire and looks just like all our other houses, features a number of innovative sustainable measures including timber-frame windows, external water butt downpipes and energy-efficient light fittings.” Which leads us on neatly to the debate of exactly how interested the general public really are in ‘saving the planet?’ Paying lip-service to conservation issues is the easy part, but do homebuyers really care about how green a particular firm’s credentials are and if so, are they prepared to shell out that little bit more to see them implemented. “Mactaggart & Mickel has a dedicated Sustainable Working Party Group, led by Liz Farrell, which meets on a quarterly basis to discuss environmental best practice – from internal office procedures to the housebuilding process,” added Joanne. “An increasing number of people are looking for ways to do their bit to be greener and, as a leading housebuilder, we also have a responsibility to do what we can for the environment. “Each home at our Balgarth development features a range of energy-saving measures and each was built using sustainable material with increased insulation space. “This development of 11 homes sold out within six months and our aim is to extend these practices across all our new homes in the future.” As with most things in life however, the bottom line tends to revolve around finance, so looking at the bigger picture, is cost more important than energy efficiency/sustainability? “The cost of sourcing and incorporating sustainable features is expected to drop,” says Joanne, “making it more commercially viable for the future. “We are continually investing in the research and development of our current design and construction techniques in a bid to make all our homes as efficient as possible. “Mactaggart & Mickel Timber Systems works with self-builders and developers of all sizes to provide guidance and partnership through the timber frame construction process. The benefit for the customer is savings on time and money, but also the sustainable savings on Co2 emissions.” As Kevin Costner famously said in Field of Dreams, ‘if you build it they will come’ which is all well and good, but once you’ve got them there, how do you persuade them to buy? What exactly is needed to kick-start the housing market. Over to Joanne once more. “Home buyers need access to fair lending. Even with the continued freeze in interest rates, people’s chances of buying a decent home are being thwarted by the banks’ failure to pass these on to their customers. “Trust and confidence have still to return to the banking system but there are signs that the worst days are behind us. People will continue to need to move and we will continue to offer incentives and tailored packages to those who may need assistance.” Theresa Barbour, sales & marketing director for Thomas Mitchell Homes believes that even in these harsh economic climes, housebuilders can thrive, but only if they listen closely to prospective purchasers. “As we awake to a new dawn in the New Homes Industry there are various schools of thought on the way forward for developers,” comments Theresa, “not least what is the house buying public really looking for in a new home? “At Thomas Mitchell Homes we have always been proud of the quality of our product, maintaining key elements that add not only visual appeal, but also longevity of use and character. Even through the boom period, attention to detail, high specification and pride in our homes, was always to the fore. “In order to keep the wheels turning in the market, it is more important now, than ever before, that we work closely with our purchasers and establish what they recognise as a benefit and what price they are willing to pay. Buyers’ expectations are high and they will decide if they are getting value for money. “There is a whole new generation of potential home owners in the market whose requirements are different from what their parents were. Reduced running costs, low maintenance and home technology issues are subjects high on the agenda with purchasers, and it is important these elements are incorporated in the designs of new homes. “We continually look for areas to improve our designs but listening to what your audience is looking for, before they purchase and to their feedback, is the key element to delivering the right product to the market.” It isn’t, of course, only housebuilders who have found themselves caught up in the web spun by the world’s current economic malaise. Estate agents have also become entangled and David Alexander, proprietor of D.J Alexander in Edinburgh, agrees with Joanne Casey when she argues the banks could be doing more to move the housing market forward. “I would sum it up in just two words,” says David. Liquidity and confidence. “No matter how long interest rates remain at their current low level, the market will begin to revive only when banks and buildings societies start to lend at “normal” levels. “Even young couples who are dedicated savers or who are fortunate enough to be offered substantial financial help from parents, find that providing deposits of 25 and 30 per cent are totally beyond their reach. “While it is the case that earlier irresponsible lending by the banks (e.g. mortgages with an loan to value ratio of 125 per cent or loans of up to six times annual income) caused part of the current problem, the pendulum has swung too far the other way: deposit levels need to be brought into line with consumers’ ability to pay.” David would also argue that this is no time to come over all coy, advocating a robust approach to tackle the situation head-on, advocating measures, he is pleased to see, many companies have already not only taken on board, but put into practice. “An economic crisis calls for inventive and bold market responses so house-builders need to aim their market at as wide a target audience as possible. “To the conventional “owner occupier” sales, therefore, should be added deals encompassing let to buy, part exchange and shared equity schemes; the latter may particularly appeal to young couples who are basically able to service a mortgage but are unable at the present time to obtain sufficient mortgage finance. “As for the ‘green’ issue, from a purely practical point of view, householders are seeking to reduce energy and other running costs so they’ll welcome anything that allows them to achieve this. “Wherever possible, new properties need to come with the appropriate technologies. With most households having two working adults, buyers are looking for technologies that are simple to operate. “Another important issue or contemporary buyers are the sound insulation qualities of a new-build home as there has been a sharp rise in neighbour disputes over anti-social behaviour, particularly noise. “Whether buying a house or a flat, people want to feel comfortable and secure in their “own space”, free from the people next door and, more generally, the pressures of the outside world. “It’s not all self, self, self when it comes to the environment however, so while buyers are principally motivated by saving energy costs, there is a growing perception that global warming is a problem. That being the case, any property that addresses this issue will inevitably have an additional marketing appeal.”

SCOTLAND’S NEW HOMEBUYER, October 2009

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