The home building industry in Scotland directly and indirectly contributed around £6 billion to the Scottish economy in 2006 - that's 6% of GDP and greater than that of higher profile industries such as agriculture, fishing, electronics and tourism.

Prior to the onset of the credit crunch, it was the largest source of private investment in the Scottish economy and a major employer, directly and indirectly responsible for the livelihoods of 100,000 people in Scotland.

However, with much new development now on hold:

  • around 26,000 jobs (half of the industry's directly employed workforce) have already been lost with many more remaining under threat

  • the biggest source of private investment in schools, roads, infrastructure and other community facilities has effectively vanished

  • output has collapsed with January 2009 statistics from NHBC showing an 88% decrease in the number of private new homes being started in Scotland compared with the same period a year ago

With only 22,361 new homes completed in Scotland in 2008, this compounds the significant housing shortfall we believe already existed when taking account of factors such as household formation and stock replenishment rates.

More than two thirds of homes in Scotland are owner-occupied.  Scottish Government research aimed at gaining a better understanding of the immediate and longer-term housing aspirations of households in Scotland shows that 86% of respondents would prefer to own their home.

 

Reflecting the difficulty young people in particular have in getting on to the property ladder, figures published by the Office for National Statistics (April 2009) reveal an increase in the number of young men and women living with their parents of around 300,000 since 2001.  This accounts for almost a third of men aged 20-34 (1.8m) and a fifth of women aged 20-34 (1.1m) with 8 out of 10 attributing this to the high cost of housing.

Scotland needs more new homes.  Whilst the Scottish Government aims to increase the number of new homes built each year to 35,000 by 2015, we believe that 2007 production levels need to be doubled in order to meet pent-up demand.  

But the industry faces key barriers to the delivery of new homes.  In addition to the issues of consumer confidence and the overall availability of mortgage and development finance, these include the severe shortfall of land being made available for housing through the planning system (leading to excessive demand over supply and fuelling past house price inflation) and years of underinvestment in the country's water and drainage infrastructure constraining development.  

To view independent research by MacKay Associates on the economic value of the home building industry in Scotland, click here.   The Scottish Government has also published a review of the Scottish housing market which can be accessed here.