A final issue, that could define the future outlook for the industry, specific to the residential construction sector, is its apparent growing reliance on the 'for sale' housing model, with which it has never been more deeply synchronised. As the social housing sector has changed its model to private sale led cross subsidy and surplus generation in response to a series of policy changes, there is now less opportunity, in the event of a private market correction, to create a 'soft landing' through a social housing build programme. This is a real risk to housing delivery in the UK due to even greater cyclicality than seen previously.
Government therefore has a strategic choice to make about the future role of grant funded social housing which has historically been used as a counter cyclical demand tool. This also brings into question the role that may be played by direct delivery and investment measures across all tenures either at a central, regional or local government level.
In addition, the opportunity highlighted in section 2 regarding the Build to Rent sector is a very real one to avoid the 'business as usual' prognosis and would create a more acyclical and at scale demand that could underpin significant investment in new innovative ways of building and appropriate new skills being developed across the industry.
These key choices on tenure diversity should be seen in the context of wanting to avoid a high level of synchronization between housing construction output and the very cyclical, private for sale, tenure model which could be very damaging to the industry for all the reasons already rehearsed. It also sets the scene for how important traditional housebuilders will and should be in future total housing delivery with less reliance on their output. More tenure diversity would immediately imply different supply chain and delivery models that may better promote innovation. In time, this may influence core house builder delivery models but it is considered unlikely that innovation at scale will start in the volume housebuilder segment of the market despite some interesting exceptions (see Case Study 11).