Thursday, February 28, 2013

Britain Facing a Major Housing Shortage

The British housing sector is in crisis.

The problem certainly is not with central London, where house prices have risen 53 percent since March 2009, but with the estimated shortfall of 750,000 homes around the country by 2025, according to a report by the independent Institute for Public Policy Research.

One method growing in popularity is the “flat-pack” house, a label that covers a variety of prefabricated house building techniques that generally involve making wall units or modules in a factory and assembling them on-site.

According to a 2012 study by the Royal Institute of Chartered Surveyors, “flat-pack” homes can be as much as 10 percent cheaper than traditional houses — although that statistic does not take into account the cost of land. They also are quicker to assemble, and need fewer materials and a smaller work force, the study says.

Of course, Britain has used this idea before. After World War II, the British government tried to meet the housing shortage by building more than 150,000 homes out of precast concrete and materials like asbestos, tin and aluminum.

Today, the prefab has proved popular in Sweden, where the home store Ikea has teamed up with BoKlok homes to sell flat-pack houses at prices ranging from £70,000, or $108,000, for a one-bedroom unit to £150,000 for a three-bedroom house. 

BoKlok also has sold more than 5,000 of their own designs in Scandinavia, where they are popular as second homes.


Scott Hedges said...

Hi Coach -

It is nice of you to pass on this note, however, I'd like to offer a slight correction.

The original article that you sourced from is not very well researched as very little of the popular press' writing on offsite building seems to be.

Some journalist could not resist slapping the term "flat pak" onto anything IKEA - so now we have yet another confusing term orbiting planet prefab.

IKEA did not "go to" BoKlok, they co-created it as a joint initiative with the construction giant SKANSKA, who operate a residential division in Sweden and Europe.

BoKlok competes as a budget developer.

The construction method's they use draw on the industry standards. Skanska contracts the BoKlok work to various factories, and formerly was deeply involved in developing the systems that have evolved in Sweden.

The Swedes call this "industrial wood building" - which highlights the fact that these buildings are not built inside bigger buildings using the same carpenters on ladders as site builders then shipped to a jobsite as an oversize load with saftey escorts. They are manufactured and delivered in standard size trucks as value added building components.

While I suspect that the popular press will always play loose with these ideas and terms - the coach should demand a bit more discipline!

Scott Hedges said...

Hi Coach,

One more small, but I think noteworthy thing, you wrote that BoKlok has built 5000 units, but you said "mostly second homes".

I don't think that any BoKlok projects are owned as second homes. Their development strategy in Scandinavia is quite explicit, and is derived from the IKEA practice of setting the price, and then designing the dwelling to meet the price.

What happened at BoKlok is important to understand - its not about "flat pak", and it definitely is not about second homes, or furnishing "modern homes" or any of that, here is their story, according to them, note that the first thing they did was NOT call an architect!:

From the very start of BoKlok, it was decided that the approach chosen was to
be unconventional for the sector. Instead of calling in an architect, the
company contacted Statistics Sweden and asked: “What is the current
composition of households in Sweden?” Back in 1996, 75% of households in
large towns and cities were 1, 2 or 3-person households. The corresponding
figure for the other parts of Sweden was 65%. These figures have since
increased, and today more than 85% of households in Stockholm are classed
as “small”. The corresponding figure for the rest of the country is 75%. Behind
these figures we find the constantly increasing share of single mothers and
fathers, students, young people looking to leave home, pensioners and other
people who choose to live alone. Unfortunately, city planners have not focused
on these broad target groups when laying out residential areas. These
households very often have just a single income. Small households also have
different requirements for functions in the home to those of others on the
“second-hand” house market.
There were many players building for the conventional nuclear family, but few
were concentrating on small households. Therefore, this was the segment
BoKlok chose to focus on. The next step was to ask about the disposable
income of small households. The question was put to Pia Nilsson, the family
economist. She was asked how much single parents could afford to pay for a
house without having to compromise on other payment obligations such as
food, day-care, bus travel, clothes, insurance and so on. The answer came
back: SEK 3,400. So this was the figure chosen for the rent. Since then, much
has happened to improve disposable income. In fact, a single mother today
can afford to pay around SEK 6,800 (about $1000 US) a month for her home.