United Kingdom House Building Collapses
“United Kingdom House Building Collapses”
Annual Demographia International Housing Affordability Survey
September 5, 2008
The United Kingdom National House Building Council will say later this week that just 5,843 homes were built during August – a 69% fall on the same month last year – according to the UK Telegraph.
Annualizing the August figure this suggests 70,116 units.
In comparing construction performance across time, markets and nations – the measure used is the “build rate per thousand population”
The United Kingdom with a population of 61 million “build rate per thousand population” – based on these August figures annualized is 1.15 / 1000 – likely well below new housing rates through the Great Depression.
Replacement should be in the order of 2 / 1000 to 3 / 1000 population.
Recently, the California Building Industry Association in its Report on the month of July now expects just 72,000 residential units to be built this year in this State of 37 million people. This represents a build rate per thousand population of 1.94 per thousand population.
To understand the gravity of the United Kingdom and California situations – and in using the United Kingdom build rate per thousand people of 1.15 as a guide – if the following markets collapsed to United Kingdom levels, they would be building at the following volumes –
(a) Australia with a population of 21 million – 24,150 residential units per annum at the current UK build rate of 1.15 / 1000. Australia is currently building around 145,000 units per annum or a build rate per thousand population of 6.9 / 1000. With its current population growth and construction backlog, it needs to be putting in place near 200,000 units per annum
(b) New Zealand with a population of 4.3 million – 4,945 residential units per annum at the current UK build rate of 1.15 per 1000. It had reached 33,000 per annum at the peak, then slipped to 24,000 and is now at around 16,000 units (July figures annualized) or a build rate per thousand population of 3.72.
(c) Republic of Ireland with a population of 4.5 million –5175 residential units per annum at the current UK build rate of 1.15 / 1000 population per annum. At its peak – the Republic of Ireland had been putting in place near 90,000 units per annum and is currently putting in place around 50,000 units per annum.
(d) United States with a population of 305 million –350,750 residential units at the current UK build rate per 1000 population of 1.15 per 1000 population.
(e) Canada with a population of 33.6 million – 38,640 residential units per annum at the current UK build rate per 1,000 population of 1.15.
(f) California with a population of 37 million – 42,550 residential units per annum at the current UK build rate of 1.15 per 1,000 people. Its residential construction has already slumped from a low 200,000 units per annum to 72,000 units per annum.
(g) Texas with a population of 24 million – 27,600 residential units per annum at the current UK build rate per 1000 population. At its peak Texas had been putting in place around 212,000 units per annum and some 176,000 last year.
It seems likely that once policymakers and the general public experience the destructiveness of these artificially created housing bubbles, that policy initiatives will be put in place to ensure that they do not happen again.
This is sometimes referred to as – learning lessons the hard way.