Capital Markets Corporate

October 14, 2019

What we learned from the 2019 Housing Market Intelligence Conference

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At the start of October, our real estate and construction team attended the Housing Market Intelligence (HMI) Conference. The 300 delegates attended at a unique moment in British history; the lack of clarity around Brexit shaped the overall mood, as did the nearby Extinction Rebellion protests which were witnessed by many on their commutes into the City, and acted as icebreakers in initial conversations over coffees. Amidst a day of informative talks from industry heavyweights, there were three key takeaways relevant to me and my clients.

  1. Housebuilders need to tackle the elephant in the room: climate change

Lord Deben’s (the Rt. Honourable John Gummer’s) impassioned speech was an energetic start to the day, he was particularly critical of housebuilders for the lack of action they have taken (in his opinion) to address climate change in the way they build and the end product they create. He was particularly focused on the Paris Climate Agreement, and the requirement for everyone to do their bit to reduce carbon emissions. He appealed to the audience’s allegiance to capitalism and the prospect of government intervention to mandate zero carbon homes if housebuilders fail to adapt and proactively take the environment into account in their strategies.

This got me thinking about my housebuilder clients. Redrow, for example, has a key focus on sustainable community creation and ensuring the vast majority of their waste is diverted from landfill (97.7% in 2019, to be precise). I also considered the various new build apartments I have personally lived in as a tenant over the years. One memorable winter in a (relatively) newly built apartment in Crawley we only put the central heating on twice, which was a welcome monetary saving but no doubt benefited the environment too. In contrast I recall living in Victorian flats where the central heating was on near-constantly from October to February.

In my view, housebuilders (and the industry as a whole) can do more to convey what they are already doing to build in a sustainable way and produce a sustainable end product. There appears to be a real disconnect between what they are currently delivering and the Government’s understanding of how they are working hard to meet environmental goals. This comes down to collating compelling stats and facts, lobbying, as well as shouting more about the homes they build in interesting new ways. Several years ago our client Hill monitored a family who lived rent- and bill-free in one of their zero carbon houses for a year to truly test its benefits. Not only did this produce some compelling results, it was a PR coup and achieved extensive media coverage for the client across all channels and resulted in significant benefits for the residents of the home itself.

  1. We still have a talent and diversity issue

The HMI Conference was well attended by senior people in housebuilding however the vast majority of delegates (about 90% at a guess) were men and indeed it was very difficult to spot anyone of colour in the room. This brought home to me that a career in housebuilding does not yet have a broad appeal, which means the industry is undoubtedly missing out on talented people.

It was therefore encouraging to hear about the Home Builders Federation’s plans to launch a campaign around promoting skills in the housebuilding industry and showcasing the range of careers on offer. To be truly effective the campaign should not only seek to hit traditional media, but should also target young people through social media and targeted adverts via recruitment media, as well as providing materials for schools to use to better discuss construction careers with students. It is not enough for campaigns to be deployed through traditional PR channels, even though this helps to create a rosy glow. They also need to also target the people housebuilders wish to attract directly, with authentic and creative messaging and assets. You need only look at the Army’s recent recruitment campaign to see how effective a multi-channel programme of this nature can be.

  1. People still want to buy new homes, but housebuilders are the new bankers

The Sunday Times’ economics editor, David Smith’s, speech noted that consumers are still spending. Despite the current economic and political upheaval, employment levels remain high and wage growth is good. People still want to buy new homes and housebuilders continue to ramp up output to meet this demand. The NHBC has issued multiple stories this year about the number of new home registrations increasing and hitting record levels.

However, the housebuilding industry has a reputational issue on its hands. Rightly or wrongly, housebuilders’ actual or perceived misdemeanours have been hitting the headline at a rate of knots, but continue to flourish in terms of their profits. It is more important than ever that housebuilders do as much as possible to build a positive reputation. Many housebuilders already do a lot to support their local communities, whether this is through the mandatory section 106 agreements to community work. It is the latter that is now more important, the public knows that to get planning permission there is a certain amount of quid pro quo. Carefully thought out community engagement plans, sensitively publicising these and collating stats and facts to showcase overarching efforts are more important than ever.

An example is Andy Hill’s, CEO and founder of Hill’s, announcement at the business’s 20th anniversary celebration, where he committed to a £10 million charitable pledge which will enable the delivery of 200 modular homes to help the homeless.

With power comes responsibility. This was very clear at this year’s HMI Conference. Many of the best housebuilders are already taking that responsibility seriously, in many cases they just need to start shouting about it more effectively.

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