It’s the supply chain, stupid!

The UK population has grown faster than most European countries and should knock on 70 million this year, +17% up in 20 years.

But house building has not kept up with this growth. Labour promised to build 1.5 million new homes by the end of this parliament, but housebuilding has gone backwards in the last two years.

Government is starting to relax planning restrictions and regulations but needs to clear the barriers to building. In London, where the problem is acute, housebuilding has collapsed to a historic low. Last year just 5,891 homes were started, 94% below target and a 75% year on year decline. That’s the lowest for any major city in the developed world since 2000.

We also lack the skilled labour and building materials capacity to build that many. Most of the small to medium sized housebuilders who built  a large proportion of our housing stock disappeared in the 1990/1991 recession.

The biggest consequence of the housing crisis has been the growth of the housing Haves and Have Nots. Mortgage free or mortgage light, over 55s homeowners – the Haves – own over 90% of UK savings and pensions. They are the Bank of Mum & Dad. With rising house prices working on even modest houses, and house prices continue to rise nationally, their housing wealth has exploded. Investing in home improvements is a no-brainer for them. Any money they spend on home improvement is absorbed effortlessly by the growth in value of their home. Companies selling to the Haves have done much better than companies selling to the Have Nots. Younger Have Not homeowners may have much greater incomes, but heavier mortgages and higher outgoings have squeezed their disposable incomes. So, they restrict home improvements to the essentials: look for the cheapest, do the minimum, or leave it for another year. If your customers sell to them, they will also be squeezed, and most likely, you and your suppliers will be too.

If you’re wondering what’s happened to your profits: look at your supply chain.