What do you get for your money?

The Design for Manufacture Competition also known as the 60K house competition produced a very interesting "lessons learnt" report. One part of which says:

COUNTING THE PENNIES
Mortgage money has been cheap for a decade. The Halifax’s lending rate averaged 6.7 per cent from 1997-2001 and then 4.89 per cent from 2002-2005. This created the climate of confidence for house buyers to buy new homes and upgrade existing ones through renovation and extension. That in turn has driven demand such that build costs first outstripped and then began to accelerate beyond other inflation indicators:
■ Over the last 10 years building costs rose 70 per cent while retail prices rose
30 per cent.
■ Over the last five years building costs rose 40 per cent while retail prices rose
15 per cent.
Recent data by EC Harris and Savills estimate that increases in build cost to 2014 will run at around 5 per cent a year whilst house values are set to rise only 3.5 per cent a year(Property Week, 13.04.06). The drivers behind price rises are complex but availability of labour has been significant. Several housebuilders have tried to limit their dependence on skilled trades: both the number of persons and the number of hours each works per home. Those that have not tackled labour costs are perhaps looking to materials manufacturers that have been developing innovative variants to reduce labour charges incurred on site and, in some cases, the need for skills and years of experience. This happened first with plasterboard and push fit plumbing, and is now spreading to masonry with large format blockwork, panels of brick slips and clay rainscreen systems and electrical works with plug-and-play wiring.

The other response – the cynical one – is to give customers less for their money: tiny starter homes as small as 38 sq m, that cost more per square metre to purchase yet achieve no construction cost savings. Sadly, that response in UK housebuilding is all too common. The Design for Manufacture Competition sought to change all that.