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Can Innovation Solve The Housing Shortage?

The Stamp Duty holiday is now (finally) at an end and the housing market is back to business as usual.  Part of business as usual is the fact that many buyers (and would-be buyers) are frustrated by the continual lack of suitable, affordable housing stock.  Given that this has been a problem for, literally, decades, is now the time to take a radical new approach?

Housing in the UK

There are many reasons why the UK has a housing shortage.  Most, if not all of them, however, ultimately hinge on two key facts.  Firstly, the UK is a small and densely-populated country.  Secondly, the UK is in a continual process of social and economic change.

The UK’s small size means that there is a lot of pressure on land.  This can lead to significant conflicts of interest.  For example, while some people want more new homes, others want more agricultural land and more of the countryside to be preserved.

The UK’s social and demographic changes mean that it’s challenging to predict what people are going to need and want in their homes.  This means that housing can effectively become obsolete.  If it does, it either needs to be updated or torn down and rebuilt.  There is inevitably a cost to this and hence a risk.

Right now, costs are extremely high and hence so is the risk.  Brexit, COVID19 and inflation have all hit the construction industry hard.  Necessity, however, is the proverbial mother of invention.  The UK absolutely needs more homes.  It, therefore, needs to come up with innovative solutions to the housing shortage.

Repurposing existing buildings

The first obvious solution is to repurpose existing buildings.  That includes buildings that were originally intended for residential use but have now become obsolete.  There is nothing whatsoever new about this concept.  What is, however, continually changing is the efficiency with which it is done.

Although some people might complain about “rabbit hutch” dwellings, the truth is that innovation has made it practical to live in much smaller spaces.  IKEA recently took this to a new level with its $1-a-month apartment in Shinjuku, Tokyo.

With a floor space of just 10 square metres, the apartment packs in everything a young single person could need for a comfortable life.  Whether or not an older person or a couple could live there is another question but it does show what’s possible.  It also highlights the principle of squeezing every last drop of functionality from existing spaces.

Building new homes

The second obvious solution is to build new homes.  This is, however, not as simple as it might sound.  The first challenge is to find the land on which to build them.  The second challenge is to create a building project which satisfies legal requirements and makes a reasonable profit for the homebuilder.

This was hard enough before Brexit, COVID19 and the current rate of inflation.  Now it’s even harder but again, necessity is the proverbial mother of invention.  While the construction industry is still very dependent on human labour, it is also starting to move towards automation.  For example, there are now bricklaying robots that can replace or work alongside human bricklayers.

Another option would be to expand the use of prefabricated housing.  This shifts the production burden away from the building site.  It thus makes it easier to apply standard manufacturing strategies to the construction sector.  Appropriately enough, prefabricated housing is already being produced by the acknowledged masters of the flatpack IKEA, or more accurately, by BoKlok, jointly owned by IKEA and Skanska.

Leaving aside jokes about putting together IKEA products, the fact remains that “flatpack housing” could be a very cost-effective and quick way to expand the UK’s housing stock.  Sadly, BoKlok’s intended entry to the UK market has had to be delayed due to circumstances.  It is, however, still actively interested in developing homes for the UK market and looking for suitable sites.

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