House builders market loses GBP5.5 billion

MTW Research says latest events will result in the house builder market losing more than 75% of its value over period to 2009.

As an increasing number of large scale redundancies in the house building market are announced, research for a new report has found that GBP5.5 billion is set to be wiped off the value of the housebuilding industry in 2008, reflecting the largest single annual decline ever recorded.

Specialist research publisher MTW Research has found that rapid growth in borrowing in recent years, coupled with a collapse in demand for new housing due to the 'credit crunch' is likely to result in the house builder market losing more than 75% of its value over a period to 2009.

Rising pressure on margins due to higher than average inflation in many of the key materials sectors, as well as fuel and labour costs, have also sustained pressure on the industry, all of which result in a particularly gloomy short term outlook for house builders and their suppliers.

However, whilst MTW Research highlights the difficult period ahead in the short term from a rapid contraction in sales, the report also points to a the likelihood of a recovery in the market by late 2009 / early 2010, providing some longer term optimism for the housing market and suppliers to the house builders industry.

A number of key issues are identified by MTW as likely to underpin market growth from 2010 onwards, though these remain dependent on wider issues within the global financial markets.

The UK housing market is often linked to the US housing market, with issues relating to Fannie Mae and Freddie Mac underlining the ongoing lack of confidence in general, despite the Senate Banking Chairman recently declaring the companies as "fundamentally strong".

MTW's report also reveals the strong trend of rising debt in the industry in recent years, with average housebuilders' liabilities more than doubling since 2004.

In 2008, liabilities represented more than 84% of the industry's total sales turnover, reflecting the high level of risk in the market at present.

Whilst the report suggests that this ratio is set to decline in the medium term, the industry is likely to face some difficult problems in the coming months as turnover slows dramatically and cash flow becomes increasingly restricted.

The report tracks the performance of the individual housebuilders, identifying those best placed to weather the current financial storm and providing an effective list of key targets for building products suppliers to target in this increasingly competitive trading environment.

Turnover estimates are provided for every company, alongside industry rankings for sales, profitability and net worth, enabling the reader to identify those companies most likely to grow in 2008/9.

In addition, the report also includes full mailing address details and senior decision maker contact details for the house builders, providing relevant sales leads for manufacturers.

The report, available immediately, is priced from GBP 375 and can be purchased from MTW Research by calling 08456 524324 or by ordering on MTW Research's website, where a free sample is available to download.

Back to top