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OFT Market Study Update: Home building in the UK |
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In June 2007, the OFT launched a study into the UK homebuilding market. We said that we would consider whether there were any competition and consumer protection concerns in this sector.
This study has now been running for nearly a year and is due to report, as we said at the outset, in September this year. We have been working with many stakeholders and commissioned various surveys to gather evidence. We are now coming to the end of our evidence gathering phase and over the next couple of months will discuss our initial findings with the homebuilding industry, consumer groups and other stakeholders.
In addition to gathering evidence, we have been working hard to ensure that our study complements other reviews across government and minimises the burden on our stakeholders. In particular we have held discussions with the NAO about its announced study into part of the planning regime. The two organisations have worked together to make sure that the scopes of the two studies are complementary. In order to avoid an overlap with the NAO we have refined the scope of our homebuilding market study to omit any detailed examination of the planning regime. We will limit our work on planning to looking at the impact of features which may have a strong link to our analysis of competition.
The main focus of the study remains on the areas of: the impact on output of changing prices (the apparent weak supply response) and the homebuyer's satisfaction with new homes.
As we explained at the launch of the study in June 2007, possible outcomes of the study include:
- giving the market a clean bill of health
- publishing information to help consumers
- encouraging firms to take voluntary action
- encouraging an industry code of practice
- making recommendations to the Government or sector regulators
- investigation and enforcement action against companies suspected of breaching consumer or competition law, or
- a market investigation reference to the Competition Commission.
By way of update at this stage, we are discussing with stakeholders whether or not the evidence we have collected so far indicates that the market is broadly competitive - by this we do not mean that the sector is entirely free from problems but just that the problems that may exist may not be inconsistent with a market which is functioning on a competitive basis. If this is the case, it may suggest that the apparent weak supply response (the number of new homes built may not keep pace with rising prices) is likely to reflect land supply and the relationship between capacity and the economic cycle.
On the consumer side, we are discussing with stakeholders whether or not the evidence shows that there is room for improvement in homebuyer satisfaction levels.
The next stage of the study will review our initial work and conclude several case studies around the UK to give a real life context to the analysis. We will continue to discuss our findings and thinking with our stakeholders and to assist this process we intend to publish, in draft, elements of our commissioned research from time to time. We have published a draft version of our survey examining consumer satisfaction.
Download the draft OFT house building survey (pdf 505 kb)
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New Homes Research