0:00:05 > 0:00:08It's boom time for Britain's house builders.
0:00:08 > 0:00:10They've bounced back from recession
0:00:10 > 0:00:12and their profits are up by as much as 160%.
0:00:14 > 0:00:17What we're seeing now is a real urgency to move.
0:00:17 > 0:00:19People are going, "Well, if I don't move now
0:00:19 > 0:00:22"then, actually,, house prices will go up."
0:00:22 > 0:00:25New homes are hot property.
0:00:25 > 0:00:27But this is an industry like no other
0:00:27 > 0:00:31and house builders have to cope with a mass of contradictions.
0:00:31 > 0:00:35To customers, they're selling a dream...
0:00:35 > 0:00:38That home is critically important to you and it's aspirational,
0:00:38 > 0:00:40you want to be proud of it.
0:00:40 > 0:00:45To others, this business is a source of division and distrust.
0:00:45 > 0:00:47The houses that are being planned for these green fields
0:00:47 > 0:00:50are not going to be affordable houses.
0:00:50 > 0:00:53This is an industry that's often trying to sell us
0:00:53 > 0:00:55a perfect vision of the past.
0:00:55 > 0:00:58We designed a sort of classic 18th century manor house.
0:00:58 > 0:01:02But what they're producing doesn't always stand the test of time.
0:01:02 > 0:01:07These buildings are going to be here possibly for 100 years,
0:01:07 > 0:01:11possibly for 200 years, and they're not going to get any better.
0:01:11 > 0:01:12When the house builders are booming,
0:01:12 > 0:01:15there's a surge of work for tens of thousands.
0:01:15 > 0:01:17We're employing more people,
0:01:17 > 0:01:21we're training more people, and it brings more cash into the economy.
0:01:21 > 0:01:24But it's a business that many love to hate.
0:01:24 > 0:01:27It's greed, it's profit, it's our builders.
0:01:27 > 0:01:29And it's one with a big responsibility -
0:01:29 > 0:01:31they're not just building houses,
0:01:31 > 0:01:33they're building the homes of the future.
0:01:33 > 0:01:36This is a small planet, it's a small country,
0:01:36 > 0:01:41and development has to take place on these sorts of sites.
0:01:41 > 0:01:44We find out how house builders are improving their fortunes
0:01:44 > 0:01:47by targeting the nation's prime locations...
0:01:47 > 0:01:50There has been a North-South divide in terms of house-building.
0:01:50 > 0:01:55..and tailoring their products to entice today's wealthiest customers.
0:01:55 > 0:02:00You get a nice motion to the way a door will close,
0:02:00 > 0:02:03and I think those small details are very, very important.
0:02:03 > 0:02:06This is the story of how the house builders have learned
0:02:06 > 0:02:10to survive and thrive while making the most essential, desirable,
0:02:10 > 0:02:14but hotly debated product of all - a home.
0:02:22 > 0:02:23The show home -
0:02:23 > 0:02:28the sparkling shop window for Britain's house-building companies.
0:02:28 > 0:02:30These businesses are selling a lot more than
0:02:30 > 0:02:32just a roof over our heads.
0:02:32 > 0:02:34This is, for most of us,
0:02:34 > 0:02:39the most life-changing and expensive product we'll ever buy.
0:02:39 > 0:02:41It doesn't matter whether you're buying
0:02:41 > 0:02:43an entry level starter apartment,
0:02:43 > 0:02:45particularly if it's your first home,
0:02:45 > 0:02:47or if you are buying, you know,
0:02:47 > 0:02:50the sort of aspirational home at the end of your working career.
0:02:50 > 0:02:53That home is critically important to you and it's aspirational,
0:02:53 > 0:02:56you want to be proud of it.
0:02:56 > 0:02:58After the long recession,
0:02:58 > 0:03:02the desire to own one of these dream homes has been reignited.
0:03:02 > 0:03:05Young mum Jemma is hoping to get her foot on the property ladder
0:03:05 > 0:03:07on this new estate in Wiltshire.
0:03:07 > 0:03:10OK, come on through to the kitchen.
0:03:10 > 0:03:15This is a lovely kitchen-diner, very large. This is our Calne show home.
0:03:15 > 0:03:17For Jemma, buying a new home means
0:03:17 > 0:03:20she can ensure everything is just so.
0:03:20 > 0:03:22If you were buy an older property,
0:03:22 > 0:03:24you kind of make do with what's there,
0:03:24 > 0:03:27or you've got to plan in costs to upgrade
0:03:27 > 0:03:29if you wanted to do bathroom or anything,
0:03:29 > 0:03:31but to buy a new-build, to be able to design your kitchen and bathroom
0:03:31 > 0:03:35as soon as you move in, they've just got so much to offer.
0:03:35 > 0:03:37It's a blank canvas you can design yourself
0:03:37 > 0:03:39and that's just really appealing.
0:03:41 > 0:03:43Sales advisor Michelle is the friendly face of
0:03:43 > 0:03:46one of Britain's biggest house builders, Persimmon.
0:03:46 > 0:03:50We've got a lovely product here. It's nice to show it off.
0:03:50 > 0:03:53You can see the excitement in their faces,
0:03:53 > 0:03:55literally, when we open the front door.
0:03:55 > 0:03:58It's selling them their dream.
0:03:58 > 0:04:03It is a major, major purchase. It's exciting, I love it.
0:04:03 > 0:04:06- We can paint it pink for her. - Yes, very nice.- OK?
0:04:06 > 0:04:10Michelle and her colleagues helped Persimmon sell more than
0:04:10 > 0:04:1111,000 homes last year,
0:04:11 > 0:04:15generating profits of more than £300 million.
0:04:15 > 0:04:17Persimmon is focused on the family market
0:04:17 > 0:04:19so effectively, we're building homes
0:04:19 > 0:04:22through the range of two-bedroom houses right up to five-bedroom.
0:04:22 > 0:04:26Our average selling price is 180,000 in 2013,
0:04:26 > 0:04:28so, you know, that gives you an idea
0:04:28 > 0:04:30of where we are in the market
0:04:30 > 0:04:34and we're certainly fair and squarely in that family home
0:04:34 > 0:04:36for the man on the street to buy.
0:04:39 > 0:04:42Persimmon isn't the only house builder
0:04:42 > 0:04:44making a mint from bricks and mortar.
0:04:44 > 0:04:47Over the last year, Barratt Homes
0:04:47 > 0:04:50have seen their profits soar by 160%.
0:04:50 > 0:04:52I think what we're seeing now is a real urgency to move.
0:04:52 > 0:04:55People are going, "Well, if I don't move now, then actually
0:04:55 > 0:04:57"house prices will go up."
0:04:57 > 0:05:00And so, there's a real urgency come in to it
0:05:00 > 0:05:02and certainly on, on good, well located sites,
0:05:02 > 0:05:05we're seeing very, very strong levels of demand
0:05:05 > 0:05:07and those are the sites where, you know,
0:05:07 > 0:05:11we're struggling to keep up from a construction point of view.
0:05:11 > 0:05:13With the house builders constructing homes
0:05:13 > 0:05:15at the fastest rate for a decade,
0:05:15 > 0:05:17the heat is on for the companies
0:05:17 > 0:05:20producing the raw materials of the trade.
0:05:22 > 0:05:24All the bricks that are made at Claughton
0:05:24 > 0:05:26are all house builder bricks.
0:05:26 > 0:05:28We bring the material down from our old quarry
0:05:28 > 0:05:30which is about one and a half miles.
0:05:30 > 0:05:34That clay is then blended with a fire clay to make this product.
0:05:36 > 0:05:39Here at the Claughton Manor brick factory in Lancashire,
0:05:39 > 0:05:43they're producing bricks for new homes all across the UK.
0:05:43 > 0:05:46The tunnel kiln stretches about 110m long.
0:05:46 > 0:05:50There would be about 300,000 bricks in the kiln.
0:05:50 > 0:05:54We have a spy hole here where you can actually monitor the heat in the kiln.
0:05:56 > 0:06:00We're looking at about 1,025 degrees there.
0:06:00 > 0:06:03This factory is currently producing enough bricks
0:06:03 > 0:06:06to build 100 three-bed semis a week.
0:06:06 > 0:06:09But four years ago, the place looked very different.
0:06:09 > 0:06:12In March 2010, it was then announced that the factory would be
0:06:12 > 0:06:17mothballed because there was no let up with the recession.
0:06:17 > 0:06:19We made 28 people redundant here.
0:06:19 > 0:06:21It was quite devastating times.
0:06:21 > 0:06:24With 24 million unsold bricks in the yard,
0:06:24 > 0:06:27Graham was left in charge of the abandoned brickworks.
0:06:27 > 0:06:29It was a bit eerie at times, really,
0:06:29 > 0:06:31when it was only two or three on site.
0:06:31 > 0:06:34We're used to quite a warm environment in this factory.
0:06:34 > 0:06:36It was cold, damp.
0:06:36 > 0:06:39It was not very pleasant, really.
0:06:39 > 0:06:43The changing fortunes of this factory reflect an important fact -
0:06:43 > 0:06:46house-building refreshes parts of the economy
0:06:46 > 0:06:48other industries can't reach.
0:06:48 > 0:06:51House-building, on a year-by-year basis,
0:06:51 > 0:06:54is a relatively small part of national income.
0:06:54 > 0:06:56But where house-building is important
0:06:56 > 0:06:59is it stimulates a lot of other demand
0:06:59 > 0:07:03which helps gets the economy moving and that's what we're seeing now.
0:07:05 > 0:07:08House-building may have a positive effect on the economy,
0:07:08 > 0:07:11but it's also a business that generates conflict and controversy -
0:07:11 > 0:07:15from the price of the products, to where they're built
0:07:15 > 0:07:16and how they're designed.
0:07:16 > 0:07:19To understand some of the fiercest rows of today,
0:07:19 > 0:07:22you have to delve into the industry's biggest ever boom.
0:07:27 > 0:07:30The 1930s was a time of economic hardship
0:07:30 > 0:07:34but it was also the era that gave birth to the modern house builder.
0:07:34 > 0:07:38Over the course of the decade, nearly two million homes were built
0:07:38 > 0:07:42by private companies - a record that has never been matched.
0:07:43 > 0:07:46NEWSREEL: 'It is possible to see for yourselves
0:07:46 > 0:07:49'houses in every phase of construction.'
0:07:52 > 0:07:54The '30s grabs people's attention because
0:07:54 > 0:07:56so much was built at that time,
0:07:56 > 0:07:59we're looking at 200,000, 300,000 homes a year.
0:07:59 > 0:08:02But what was particular about it was so many of them
0:08:02 > 0:08:06were privately built, and that's what's probably so special about it.
0:08:07 > 0:08:11The demand for new homes was born out of the Depression.
0:08:11 > 0:08:13To encourage economic growth,
0:08:13 > 0:08:15interest rates were cut to almost zero.
0:08:15 > 0:08:17That meant it was cheaper to borrow money,
0:08:17 > 0:08:21making home-ownership more attainable than ever before.
0:08:23 > 0:08:27The 1930s is a really interesting period for home-ownership.
0:08:27 > 0:08:30It's really when home-ownership takes off
0:08:30 > 0:08:33for ordinary people in Britain.
0:08:33 > 0:08:36It's the most affordable time to buy a house in history,
0:08:36 > 0:08:39partly because of the supply of houses
0:08:39 > 0:08:42and also to do with availability of finance.
0:08:42 > 0:08:49In the mid-1930s, houses are cheaper relative to wages than we see today.
0:08:49 > 0:08:54We're talking about an ability to buy a new house for £600.
0:08:54 > 0:08:59Average earnings might have been £170.
0:08:59 > 0:09:02Big companies like George Wimpey were expanding the suburbs -
0:09:02 > 0:09:06but many of the new homes were built by small, local firms,
0:09:06 > 0:09:09including Bradley and Arthur, based in Ewell in Surrey.
0:09:11 > 0:09:15This is a photograph taken, we think about 1935,
0:09:15 > 0:09:17of a house when being constructed,
0:09:17 > 0:09:21and my father is one of the four standing outside.
0:09:21 > 0:09:26The house is pretty well identical today as it was then.
0:09:26 > 0:09:28That can be seen.
0:09:28 > 0:09:31Michael and John Arthur still live in Ewell,
0:09:31 > 0:09:35where their father, William, built hundreds of houses in the 1930s -
0:09:35 > 0:09:38homes that remain highly sought after today.
0:09:38 > 0:09:41They were family houses and they were sold, I think,
0:09:41 > 0:09:44for about £1,100 in those days.
0:09:44 > 0:09:47They were always houses on very generous plots -
0:09:47 > 0:09:51about seven to ten to the acre -
0:09:51 > 0:09:57and a great deal of attention was given to the exterior appearance.
0:09:57 > 0:10:02You can see the Tudor-style design
0:10:02 > 0:10:06and good quality facing brickwork, good roof tiles,
0:10:06 > 0:10:09very often handmade clay tiles.
0:10:09 > 0:10:14It's a tribute to our father and his company and his workers
0:10:14 > 0:10:16that it was built with good quality.
0:10:20 > 0:10:22Two important factors allowed house builders
0:10:22 > 0:10:25like Bradley and Arthur to grow their businesses -
0:10:25 > 0:10:27cheap, plentiful land
0:10:27 > 0:10:31and an almost complete absence of planning regulation.
0:10:31 > 0:10:32What that meant, I think,
0:10:32 > 0:10:36was when economic circumstances became more propitious,
0:10:36 > 0:10:39a property developer could respond very quickly
0:10:39 > 0:10:43and there's no delay in getting consent for building.
0:10:43 > 0:10:47Land can be bought up and quite quickly built upon.
0:10:47 > 0:10:50The building bonanza wasn't all good news for the house builders.
0:10:50 > 0:10:53A huge increase in the supply of new homes
0:10:53 > 0:10:55had a big impact on their price.
0:10:55 > 0:11:00By the end of the 1930s, after so much building,
0:11:00 > 0:11:02you actually saw a fall in house prices over the period,
0:11:02 > 0:11:04and quite a significant one.
0:11:04 > 0:11:07This illustrates an important fact,
0:11:07 > 0:11:10which is that if you build lots of houses,
0:11:10 > 0:11:12lo and behold, house prices fall.
0:11:12 > 0:11:15You get better quality housing much cheaper
0:11:15 > 0:11:18and it's a classic supply-and-demand thing.
0:11:18 > 0:11:22These houses were a boon for aspiring home-owners.
0:11:22 > 0:11:26But for others, they were blighting our green and pleasant land.
0:11:26 > 0:11:30NEWSREEL: 'We have allowed uncontrolled ribbon development,
0:11:30 > 0:11:35'housing estates and factories have sprung up all along the main roads
0:11:35 > 0:11:38'and railways, leading outwards from the city,
0:11:38 > 0:11:42'reaching far into what could have remained open fields and woodlands.'
0:11:43 > 0:11:46Tough, new planning laws were introduced
0:11:46 > 0:11:48to halt the march of the house builders.
0:11:48 > 0:11:50From now on, they would need the consent of
0:11:50 > 0:11:54the local planning department for every new home they built.
0:11:54 > 0:11:56There's no other industry that has to ask the government
0:11:56 > 0:12:00every time it wants to produce one of its products, "Can I do it?"
0:12:00 > 0:12:02But that's what house-building does and that's, of course,
0:12:02 > 0:12:04applying for planning permission.
0:12:04 > 0:12:08Planning permission takes a long time, it's highly uncertain
0:12:08 > 0:12:12whether you'll get the planning permission and when you'll get it.
0:12:12 > 0:12:15Another obstacle to the burgeoning building industry arrived with
0:12:15 > 0:12:18new protections for countryside around the big towns and cities -
0:12:18 > 0:12:20the green belt.
0:12:20 > 0:12:24Finding land would now be fraught with risk and controversy -
0:12:24 > 0:12:28a burden that still weighs heavily on the house builders of today.
0:12:32 > 0:12:33Here in Gloucestershire,
0:12:33 > 0:12:38the battle lines are drawn between the house builders and the public.
0:12:38 > 0:12:41With a growing population, local councils say 30,000 new homes
0:12:41 > 0:12:44are needed over the next 15 years.
0:12:44 > 0:12:47But local residents have a long list of concerns.
0:12:47 > 0:12:50The houses that are being planned for these green fields
0:12:50 > 0:12:52are not going to be affordable houses,
0:12:52 > 0:12:56they're going to be three- and four-bedroom detached houses
0:12:56 > 0:13:00- for families.- Where's all the doctors surgeries? The A&E?
0:13:00 > 0:13:02The gas? The electric? The water?
0:13:02 > 0:13:04If you're going to build all these houses,
0:13:04 > 0:13:06where's all this coming from?
0:13:06 > 0:13:10We're not saying that we want the houses built somewhere else.
0:13:10 > 0:13:13We're saying that we want the numbers looked at
0:13:13 > 0:13:15and to see if this is absolutely necessary.
0:13:16 > 0:13:21One local who's worried about new homes is Christine Ball-Hornblow.
0:13:22 > 0:13:25She lives in the outskirts of Cheltenham,
0:13:25 > 0:13:28next to an area of open fields and allotments.
0:13:28 > 0:13:31A group of builders are seeking planning permission to build
0:13:31 > 0:13:34hundreds of new houses just metres from her back garden.
0:13:34 > 0:13:38On this map, this is our house, here,
0:13:38 > 0:13:40and this, here, is the field
0:13:40 > 0:13:44in which you can see where we're stood now.
0:13:44 > 0:13:47This, here, all this dark brown area,
0:13:47 > 0:13:49is the high-density housing.
0:13:49 > 0:13:52This is a mammoth amount of properties
0:13:52 > 0:13:57which really, the whole area is going to cause flooding,
0:13:57 > 0:14:01problems with noise pollution, problems with cars, et cetera.
0:14:03 > 0:14:06Up and down the country, there are worries that new homes
0:14:06 > 0:14:09will place a strain on local roads and schools.
0:14:09 > 0:14:13Christine and Rod also want to preserve their open fields.
0:14:13 > 0:14:17You know, it's just something lovely to have at your doorstep,
0:14:17 > 0:14:19and it is at your doorstep.
0:14:19 > 0:14:23You know, when it's gone, it's gone. It'll never come back.
0:14:23 > 0:14:26There's another group of local residents
0:14:26 > 0:14:30who will also have to make way for the proposed housing development.
0:14:30 > 0:14:33They're very happy pigs, we're very happy people to see them,
0:14:33 > 0:14:36and it will soon be, if the developers get their way,
0:14:36 > 0:14:40nothing but urban sprawl
0:14:40 > 0:14:43and it will be a sad day.
0:14:45 > 0:14:48The house builders are caught between a rock, a hard place,
0:14:48 > 0:14:51and their basic need to get on with making money.
0:14:51 > 0:14:54We have a dilemma in this country that everybody,
0:14:54 > 0:14:58I think, recognises that there is a need for more housing
0:14:58 > 0:15:00but really nobody wants new houses built next to them.
0:15:00 > 0:15:02So it is really about dealing with that,
0:15:02 > 0:15:06understanding what the requirements are for that local area,
0:15:06 > 0:15:09and dealing with it in the most sensitive way.
0:15:14 > 0:15:16To make the most from any land they've secured,
0:15:16 > 0:15:20house builders need to avoid getting embroiled in expensive
0:15:20 > 0:15:22and protracted disputes with the public.
0:15:24 > 0:15:27Badger Building is a small company based in Lowestoft.
0:15:27 > 0:15:29One site they've been trying to build on
0:15:29 > 0:15:33is this former boat yard overlooking the Suffolk Broads.
0:15:33 > 0:15:39They were convinced it was a prime spot for a scheme of 160 new homes.
0:15:41 > 0:15:44The original plan proposed a six- and seven-storey property
0:15:44 > 0:15:46around the water's edge.
0:15:46 > 0:15:49It was developed at a time when waterfront development
0:15:49 > 0:15:54around Poole Harbour, in London, in places like Brightlingsea,
0:15:54 > 0:15:57and along the South Coast was very popular,
0:15:57 > 0:16:01and it took its design cue, I suppose, from that.
0:16:02 > 0:16:05Confident they would gain planning permission,
0:16:05 > 0:16:08Badger paid around £3 million for the site.
0:16:08 > 0:16:11But then the locals got wind of the scheme.
0:16:11 > 0:16:13We were fairly horrified,
0:16:13 > 0:16:17because it was going to be seven storeys high and very dense.
0:16:17 > 0:16:19The height of the buildings would have been
0:16:19 > 0:16:22completely out of keeping with the ethos of the Broads.
0:16:22 > 0:16:24It would have been very unsympathetic.
0:16:24 > 0:16:28The whole thing would've been Marbella on the Broads
0:16:28 > 0:16:31which would have been ridiculous.
0:16:31 > 0:16:35Ian and Penny joined a campaign against Badger's plans.
0:16:35 > 0:16:38Not so much a case of "not in my back yard"
0:16:38 > 0:16:39as "not in my boat yard."
0:16:39 > 0:16:42We are certainly not NIMBYs because
0:16:42 > 0:16:46what we want more than anything else is for the site to be developed.
0:16:46 > 0:16:47Ever since the boat yard closed,
0:16:47 > 0:16:51it's been a very attractive place for vandals.
0:16:51 > 0:16:54We've had fires over there set by young lads.
0:16:54 > 0:16:57We've had the police called for goodness knows what else.
0:16:57 > 0:17:00It's just been pretty much a nightmare.
0:17:02 > 0:17:04The planners rejected the scheme,
0:17:04 > 0:17:07forcing Badger to go back to the drawing board.
0:17:07 > 0:17:10The local people were very uncomfortable with the first plan.
0:17:10 > 0:17:13Not only in the scale of the development and the height of it,
0:17:13 > 0:17:16but the amount of traffic that it would generate,
0:17:16 > 0:17:18and just the very urban nature of it.
0:17:18 > 0:17:20After eight years of consultations,
0:17:20 > 0:17:23Badger has finally been granted permission for 76 homes -
0:17:23 > 0:17:27less than half the number in the original plan.
0:17:27 > 0:17:31Placating the public has been a bruising and expensive experience.
0:17:32 > 0:17:35People are very frightened of the unknown.
0:17:35 > 0:17:38People need to get their objections in perspective,
0:17:38 > 0:17:42and in the context of the life that we lead,
0:17:42 > 0:17:44the houses that we need to build for people.
0:17:44 > 0:17:47This is a small planet, it's a small country,
0:17:47 > 0:17:50and development has to take place on these sorts of sites.
0:17:53 > 0:17:54For the house builders,
0:17:54 > 0:17:58planning conflicts all add to the cost of acquiring land,
0:17:58 > 0:18:01making it one of the most expensive elements of the whole business.
0:18:03 > 0:18:05So, how much does land account for
0:18:05 > 0:18:08in the cost of a creating a new home?
0:18:08 > 0:18:11For a three bedroom house priced at £200,000,
0:18:11 > 0:18:15land costs around £50,000. Quarter of the total price.
0:18:15 > 0:18:17In some parts of the country,
0:18:17 > 0:18:20land accounts for up to half of the total price.
0:18:20 > 0:18:23I think often people would be surprised at how expensive land is
0:18:23 > 0:18:26and it's certainly true that if you look at the data so far as we have data,
0:18:26 > 0:18:30land prices for housing construction in the UK particularly
0:18:30 > 0:18:33have risen incredibly sharply over the last 30 or 40 years.
0:18:37 > 0:18:41Battles with planners and the public mean that land is a scarce commodity
0:18:41 > 0:18:44and that has a big impact on the price of new homes.
0:18:45 > 0:18:47A requirement to get approval
0:18:47 > 0:18:50through the planning system for any new development,
0:18:50 > 0:18:53that's obviously a highly controversial process
0:18:53 > 0:18:57and so planning has a big impact on the supply of land.
0:18:57 > 0:19:00And most housing experts, um,
0:19:00 > 0:19:02including myself would argue in fact, um,
0:19:02 > 0:19:04the restraints of the planning system
0:19:04 > 0:19:08are one of the main reasons why we have high house prices in the UK.
0:19:08 > 0:19:10It only trickles land through
0:19:10 > 0:19:13in situations where people would like a lot more.
0:19:15 > 0:19:17There is one kind of land
0:19:17 > 0:19:20where house builders have found it easier to gain planning permission.
0:19:20 > 0:19:23That's brownfield, or previously built-on land.
0:19:23 > 0:19:28But even here, trouble lies in wait for the unsuspecting builder.
0:19:28 > 0:19:32Here in Kent, work has started on a development of 37 new homes.
0:19:32 > 0:19:35It belongs to Millwood Designer Homes,
0:19:35 > 0:19:39a local firm that specialises in bespoke, executive houses.
0:19:39 > 0:19:41'We have a mixture of homes here.'
0:19:41 > 0:19:45Prices are going to run from around 300,000-ish thousand
0:19:45 > 0:19:48up to about 1.2, 1.5 million.
0:19:48 > 0:19:51So, we're covering a big spectrum in those price ranges.
0:19:52 > 0:19:54This spot looks pretty rural,
0:19:54 > 0:19:57but it once housed a large centre for agricultural research.
0:19:58 > 0:20:01'This is a previously developed site, or land
0:20:01 > 0:20:04'and what that basically means is it was covered in buildings,'
0:20:04 > 0:20:06because the buildings were redundant,
0:20:06 > 0:20:10no longer used, not for 20-odd years by the research centre.
0:20:10 > 0:20:12And not only covered in buildings,
0:20:12 > 0:20:15but covered in masses of concrete. Hard standing.
0:20:15 > 0:20:17Brownfield sites like these
0:20:17 > 0:20:21are notorious for throwing up unwelcome surprises.
0:20:21 > 0:20:25'On site today now we've found we have more concrete to remove...'
0:20:25 > 0:20:28Underneath the concrete hard standings that we thought we were breaking up,
0:20:28 > 0:20:30we found more and more layers,
0:20:30 > 0:20:32so we're ending up with something like
0:20:32 > 0:20:35three times more demolition material
0:20:35 > 0:20:38than we ever thought we were going to have at the beginning.
0:20:38 > 0:20:41It's not just the concrete that's causing a headache.
0:20:41 > 0:20:44There's more trouble lurking below the surface.
0:20:44 > 0:20:46'We've had some mercury on this site.'
0:20:46 > 0:20:48We had been told there was mercury,
0:20:48 > 0:20:51but it turned out there was a great deal more than we thought.
0:20:51 > 0:20:53It had percolated into some of the ground areas,
0:20:53 > 0:20:56so that was a major contamination issue.
0:20:58 > 0:21:00After clearing up all the pollution,
0:21:00 > 0:21:05the next task is recycling the tonnes of concrete they've uncovered.
0:21:06 > 0:21:10And that means hiring in a ten-tonne piece of equipment,
0:21:10 > 0:21:11'the Crusher.'
0:21:16 > 0:21:19The challenges of building on sites like these
0:21:19 > 0:21:22all add to the house builders' time and costs.
0:21:22 > 0:21:25'What I can tell you today is that the overall cost of this development
0:21:25 > 0:21:27'is something in excess of 14 million.'
0:21:27 > 0:21:30The land element was probably something over three million,
0:21:30 > 0:21:34but as you can see here the problems are many, many fold.
0:21:34 > 0:21:37So, it would be much easier to move onto a nice,
0:21:37 > 0:21:40flat piece of land, set out our foundations and dig.
0:21:40 > 0:21:43Here we've got probably four months', five months' work
0:21:43 > 0:21:46before we can even think about building houses.
0:21:48 > 0:21:52For the house builders, finding land may be difficult and divisive,
0:21:52 > 0:21:54but they also have to grapple with an issue
0:21:54 > 0:21:56that's an even hotter potato...
0:21:56 > 0:22:00Making a product that will become part of the British landscape.
0:22:01 > 0:22:03For Millwood Designer Homes,
0:22:03 > 0:22:06the next step after finding land is to design their developments
0:22:06 > 0:22:10and for them, appearances are crucial to success.
0:22:10 > 0:22:13We build the houses, not to look at, we build them to sell
0:22:13 > 0:22:14and to appeal.
0:22:14 > 0:22:18And you can't sell rows and rows of houses all the same very easily.
0:22:18 > 0:22:21You need to have something that's going to appeal
0:22:21 > 0:22:24to all of the people that want to come and look at it.
0:22:24 > 0:22:26The company is particularly proud of the designs
0:22:26 > 0:22:30for its Orchard Gate development in the Kent countryside.
0:22:31 > 0:22:35'At Orchard Gate, we've got prices ranging from 300-odd thousand
0:22:35 > 0:22:36'up to a million.'
0:22:36 > 0:22:39Every single one of those, I think will appeal to the people
0:22:39 > 0:22:40in that price bracket.
0:22:40 > 0:22:43And every single one of those will enhance each other,
0:22:43 > 0:22:46so the £300,000 houses will actually enhance
0:22:46 > 0:22:49the position of the £1 million houses,
0:22:49 > 0:22:51because it's integrated, it's thought about
0:22:51 > 0:22:54and it actually is designed to appeal to markets.
0:22:54 > 0:22:57The brief for John's in-house design team
0:22:57 > 0:23:00was to create a style to complement the rustic location
0:23:00 > 0:23:05and appeal to well-heeled buyers in search of something special.
0:23:05 > 0:23:07We had to come up with a means of designing
0:23:07 > 0:23:10something which was organic in its location
0:23:10 > 0:23:14and something that had grown up over years rather than being, sort of,
0:23:14 > 0:23:17dropped in to the middle of the countryside as a modern housing estate.
0:23:17 > 0:23:19The result was a village designed
0:23:19 > 0:23:21to look as if it's evolved over the centuries,
0:23:21 > 0:23:24with an imposing Georgian-style residence in prime position.
0:23:24 > 0:23:28So, we designed a sort of classic 18th-century manor house,
0:23:28 > 0:23:33which sat in the far end of the site, linked by a long lane,
0:23:33 > 0:23:38down to a pond, and beside the pond would be some workers' cottages,
0:23:38 > 0:23:42working with the orchards and the agricultural land around.
0:23:42 > 0:23:45And that's how the initial concept started.
0:23:45 > 0:23:48Bringing this vintage village to life
0:23:48 > 0:23:50means selecting the right building materials.
0:23:50 > 0:23:53So we would use, on a number of these properties,
0:23:53 > 0:23:57reclaimed brick, and also reclaimed tiles as well,
0:23:57 > 0:24:00which gives an instant, aged feel to the scheme.
0:24:01 > 0:24:06The cost of design is a major factor for a medium-sized business like Millwood.
0:24:06 > 0:24:08For the big, high volume house builders,
0:24:08 > 0:24:11design costs are often kept to a minimum,
0:24:11 > 0:24:14and that's something that's created a bit of an image problem.
0:24:16 > 0:24:19Clive Aslet is editor of Country Life magazine.
0:24:19 > 0:24:23He's spent years looking round some of Britain's finest
0:24:23 > 0:24:24and most stately homes,
0:24:24 > 0:24:27and he's not too keen on some of their modern counterparts.
0:24:27 > 0:24:29What do I think about these new homes?
0:24:29 > 0:24:32I have to say, my heart usually sinks whenever I see them.
0:24:32 > 0:24:35I've been following this for 30 or 40 years.
0:24:35 > 0:24:38We don't seem to have got any better.
0:24:38 > 0:24:42We've lost the knack of creating beautiful urban spaces.
0:24:46 > 0:24:50Clive has come to Slough, to a typical, modern housing development.
0:24:50 > 0:24:54The first thing he notices is the vast expanse of brick.
0:24:54 > 0:24:58Windows are expensive, and so you get an awful lot of wall
0:24:58 > 0:25:02in these developments, and you can see
0:25:02 > 0:25:06this great, blank, brick wall there.
0:25:06 > 0:25:10There, they've had the idea of putting a window in.
0:25:10 > 0:25:12But it's a very small window.
0:25:12 > 0:25:16Looks pretty weird, but glass is expensive.
0:25:16 > 0:25:21There are some aesthetic flourishes here, but Clive's not convinced.
0:25:21 > 0:25:25No architect has been near the houses that we're looking at today,
0:25:25 > 0:25:28and you can see that because there are all these little details
0:25:28 > 0:25:32which have been thrown at the buildings to, I suppose, increase the value.
0:25:32 > 0:25:34But they've all been done wrong.
0:25:36 > 0:25:40If you look at the porch, for example, well, that is
0:25:40 > 0:25:44very uncomfortable because porches like that aren't meant to be.
0:25:44 > 0:25:46It's got three columns.
0:25:46 > 0:25:51Georgian architects and classical architects never designed porches with three columns,
0:25:51 > 0:25:54because the middle is where you expect to go in.
0:25:57 > 0:26:00I think what you see in these developments is buildings
0:26:00 > 0:26:04which are undifferentiated, and which go on and on for ever,
0:26:04 > 0:26:08which could be anywhere, which are built from materials,
0:26:08 > 0:26:11mass produced, used all over the country.
0:26:11 > 0:26:14They're the equivalent of the old supermarket motto,
0:26:14 > 0:26:16"pile 'em high and sell 'em cheap,"
0:26:16 > 0:26:19except it doesn't matter with a can of beans,
0:26:19 > 0:26:24but these buildings are going to be here possibly for 100 years,
0:26:24 > 0:26:27possibly for 200 years, and they're not going to get any better.
0:26:28 > 0:26:31Here in Cambridge, one house builder is keen to stress
0:26:31 > 0:26:36they're shedding the bland, box-like image that bedevils the industry.
0:26:36 > 0:26:38Certainly in the past,
0:26:38 > 0:26:41when there was a real push for volume, I think there was
0:26:41 > 0:26:44a uniformity to the way houses were built, and housing developments.
0:26:44 > 0:26:47Lots of straight roads, lots of similar house types in a row.
0:26:47 > 0:26:50Actually, what we found is that breaking that up,
0:26:50 > 0:26:53different materials, different finishes, cul-de-sacs,
0:26:53 > 0:26:56you know, roads that turn rather than are straight,
0:26:56 > 0:27:00anything that breaks up the sort of the standard look
0:27:00 > 0:27:04creates a much nicer environment for those living here.
0:27:04 > 0:27:07For Barratt, making their homes easier on the eye
0:27:07 > 0:27:09means upgrading the details.
0:27:09 > 0:27:13One of things that we've done here is to really focus on the detail,
0:27:13 > 0:27:16so for example, if you look at the brickwork,
0:27:16 > 0:27:20that is quite unusual. It's a Flemish bond brickwork,
0:27:20 > 0:27:24so there's some heritage included in this building.
0:27:24 > 0:27:26So, focus on the detail is very important,
0:27:26 > 0:27:29certainly when you're delivering houses that are more contemporary,
0:27:29 > 0:27:32because they often lose some of that detail,
0:27:32 > 0:27:34so what we're trying to do is add it back in to the house.
0:27:34 > 0:27:40Four-bedroom houses here cost more than £550,000.
0:27:40 > 0:27:44Better design and higher spec materials are helping clinch sales
0:27:44 > 0:27:47to customers who can afford to be choosy.
0:27:47 > 0:27:49You can see the colours on the roofs,
0:27:49 > 0:27:53the materials we use from original slate to reconstituted slate,
0:27:53 > 0:27:57to more conventional tiles.
0:27:57 > 0:28:01What we're trying to do is make sure that these houses look good
0:28:01 > 0:28:02in 10, 15, 20 years' time.
0:28:06 > 0:28:10But there's a lot more to maximising sales than getting the design looking good.
0:28:10 > 0:28:13The house builders need to make a product
0:28:13 > 0:28:16that reflects our changing lifestyles.
0:28:16 > 0:28:19Getting to grips with that challenge all began 40 years ago.
0:28:19 > 0:28:23The 1960s were a time of growing consumer aspiration
0:28:23 > 0:28:25and self-expression.
0:28:25 > 0:28:27One house builder realised he could boost sales
0:28:27 > 0:28:31by treating customers as distinct segments of the market,
0:28:31 > 0:28:33and tailoring his products to the individual.
0:28:35 > 0:28:38Lawrie Barratt was an accountant from Newcastle.
0:28:38 > 0:28:41The first outpost of his building empire was the home
0:28:41 > 0:28:43he built for himself.
0:28:43 > 0:28:47From this modest start, he would go on to revolutionise the industry.
0:28:47 > 0:28:52I think that Lawrie recognised you've got to have
0:28:52 > 0:28:58a marketing-based business that recognises what people want
0:28:58 > 0:29:03in terms of a home, or different styles and types and sizes of homes.
0:29:03 > 0:29:09And you've got to get on and build the houses that people want.
0:29:09 > 0:29:14The building industry historically has been production-orientated.
0:29:14 > 0:29:18Building what the builder thinks people want,
0:29:18 > 0:29:20whether they can afford it or not.
0:29:20 > 0:29:25Our whole philosophy is majored on sales and marketing,
0:29:25 > 0:29:29in offering a total service, a total package.
0:29:29 > 0:29:34Barratt's genius was to understand house buyers as consumers
0:29:34 > 0:29:37and engineer his product to suit them.
0:29:37 > 0:29:39This led him to invent a new kind of home,
0:29:39 > 0:29:42designed specifically for young singles.
0:29:42 > 0:29:45He came up with something called the studio solo.
0:29:45 > 0:29:47It was massively successful,
0:29:47 > 0:29:50because you could have a completely contained home,
0:29:50 > 0:29:54a little one-bedroom that doubled as a kitchen,
0:29:54 > 0:29:57because the bed folded back into the wall and had a kitchenette
0:29:57 > 0:30:02and it had a separate loo. So he found that the market existed
0:30:02 > 0:30:05and produced a product that fitted the bill perfectly.
0:30:09 > 0:30:13For those already on the property ladder, Barratt used a tactic
0:30:13 > 0:30:15usually associated with car dealers -
0:30:15 > 0:30:18the part-exchange deal.
0:30:18 > 0:30:21If somebody's got a house and they want to move up into a bigger,
0:30:21 > 0:30:25more expensive house, then they say "Oh, we can't afford it,"
0:30:25 > 0:30:28you say, "Well, yes, you can afford it
0:30:28 > 0:30:31"because we'll take your old home off you
0:30:31 > 0:30:35"and you pay the difference," and that is something that's become
0:30:35 > 0:30:40a lynch pin of the house-building industry, the part-exchange system.
0:30:42 > 0:30:46Soon, Barratt was selling a house for every type of customer.
0:30:46 > 0:30:49His penchant for travelling by helicopter inspired
0:30:49 > 0:30:53the industry's first nationwide television ad campaign.
0:30:55 > 0:30:59No-one makes house buying as easy as Barratt.
0:31:00 > 0:31:03No-one gives you so many purchase plans.
0:31:07 > 0:31:10All over Britain, Barratt help more people buy houses
0:31:10 > 0:31:12than any other builder.
0:31:12 > 0:31:17For singles, the retired, young couples and growing families.
0:31:17 > 0:31:22Barratt - building houses to make homes in.
0:31:23 > 0:31:26You may remember those television ads with a helicopter
0:31:26 > 0:31:30whirling round. He got people interested in the concept
0:31:30 > 0:31:32of buying their own home.
0:31:32 > 0:31:36I would give him complete recognition for the way in which
0:31:36 > 0:31:40he built up his company and therefore the industry.
0:31:40 > 0:31:43Barratt had transformed the house-building world,
0:31:43 > 0:31:46and his homes were becoming symbols of a changing society.
0:31:46 > 0:31:49For my parents, when they bought their Barratt home,
0:31:49 > 0:31:51it was a real move up in the world.
0:31:51 > 0:31:54The Barratt house was absolutely where they wanted to be.
0:31:54 > 0:31:58My dad had grown up in a council house, my mum had grown up
0:31:58 > 0:32:01in Air Force accommodation, so to kind of be home-owners,
0:32:01 > 0:32:04and we moved to a four-bedroomed house,
0:32:04 > 0:32:08one of the executive houses on an estate.
0:32:08 > 0:32:12You know, this was the kind of pinnacle of achievement,
0:32:12 > 0:32:16to be on the biggest, most exclusive house of the estate.
0:32:16 > 0:32:18The kitchen was quite modern,
0:32:18 > 0:32:22sort of Formica cupboards with metal trim,
0:32:22 > 0:32:26which my parents had been able to choose.
0:32:26 > 0:32:28Because it was a new house,
0:32:28 > 0:32:31they chose quite a lot of the fixtures and fittings.
0:32:31 > 0:32:33The whole house was painted magnolia,
0:32:33 > 0:32:37which was sort of a standard builders' thing,
0:32:37 > 0:32:41and we had dark green carpet, and they chose
0:32:41 > 0:32:43an avocado bathroom suite.
0:32:43 > 0:32:48You know, the height of chic and sophistication.
0:32:52 > 0:32:54During the 1980s, owning your own home was no longer
0:32:54 > 0:32:59just an aspiration - it was upgraded to a fundamental right.
0:32:59 > 0:33:03The great political reform of the last century
0:33:03 > 0:33:07was to enable more and more people to have a vote.
0:33:07 > 0:33:12Now, the great Tory reform of this century is to enable
0:33:12 > 0:33:15more and more people to own property.
0:33:15 > 0:33:18Prime Minister Margaret Thatcher encouraged home-ownership
0:33:18 > 0:33:21by giving tenants the right to buy their council properties.
0:33:21 > 0:33:24Mrs Parker applied to buy their house
0:33:24 > 0:33:26because they liked it very much.
0:33:26 > 0:33:29This policy tapped into many people's desire to show how
0:33:29 > 0:33:32they were shaking off the uniformity of council housing
0:33:32 > 0:33:34and moving up in the world.
0:33:34 > 0:33:37When right to buy comes along, one of the first things
0:33:37 > 0:33:40that people often do is replace their front door.
0:33:40 > 0:33:42So you'll have the kind of flush post-war door
0:33:42 > 0:33:46replaced with the mock Georgian door or the Victorian door,
0:33:46 > 0:33:49maybe the adding on of some Doric pillars,
0:33:49 > 0:33:53if you have huge aspirations, but I think those issues
0:33:53 > 0:33:58are very interesting around identity and self-expression.
0:33:58 > 0:34:01By the late '80s, a million publicly owned properties had been sold off,
0:34:01 > 0:34:06and the Government decided to withdraw from building new homes.
0:34:06 > 0:34:09From now on, that responsibility would be left largely
0:34:09 > 0:34:12to the private sector.
0:34:12 > 0:34:14With house prices more than doubling during the decade,
0:34:14 > 0:34:18these were golden years for companies like Persimmon.
0:34:18 > 0:34:22I suppose that the moment when we felt that we were
0:34:22 > 0:34:25really getting somewhere was in '85.
0:34:25 > 0:34:27We'd been going for about 12 years
0:34:27 > 0:34:31and the business had reached sufficient size and scope
0:34:31 > 0:34:35to enable us to go public on the London Stock Exchange.
0:34:35 > 0:34:38And I think that was a great moment in the history
0:34:38 > 0:34:41of Persimmon as a business.
0:34:41 > 0:34:45Lawrie Barratt was knighted, but the ultimate seal of approval
0:34:45 > 0:34:49came from the Prime Minister, who bought a Barratt Home of her own.
0:34:49 > 0:34:53Clearly the estate's Neo-Georgian charm prevailed over
0:34:53 > 0:34:56the PM's usual taste for things Victorian.
0:34:56 > 0:34:59But rising property prices were fuelling inflation,
0:34:59 > 0:35:03forcing the Government to raise interest rates to nearly 15%.
0:35:03 > 0:35:07As mortgage repayments rocketed, the '80s boom turned to bust.
0:35:07 > 0:35:09In the recession that followed,
0:35:09 > 0:35:12thousands of house builders went to the wall.
0:35:12 > 0:35:16It was a painful reminder that over confidence can lead to disaster.
0:35:16 > 0:35:19The most important thing in house-building is to watch
0:35:19 > 0:35:21the market like a hawk.
0:35:21 > 0:35:23And when the market is going down,
0:35:23 > 0:35:26that's when you've got to be very careful
0:35:26 > 0:35:29and you've got to stop investing in new land.
0:35:29 > 0:35:33And you've got to make sure that you are only building the houses
0:35:33 > 0:35:37that you have got sales on.
0:35:37 > 0:35:41And that's a very important part of running your business.
0:35:41 > 0:35:46Today, the house builders are enjoying another boom.
0:35:46 > 0:35:49This is a business where success depends on investing
0:35:49 > 0:35:51in exactly the right location.
0:35:54 > 0:35:57Even in the pricy south-east of England, house builders
0:35:57 > 0:36:01are refining methods of extracting the maximum profit from every site.
0:36:03 > 0:36:07This development in Moreton-in-Marsh in the Cotswolds
0:36:07 > 0:36:08belongs to CALA Homes.
0:36:08 > 0:36:11They pride themselves on being the most expensive
0:36:11 > 0:36:12national house builder.
0:36:12 > 0:36:16That means they only build where there are lots of wealthy buyers,
0:36:16 > 0:36:18which is why they've homed in on this area.
0:36:18 > 0:36:22The Cotswolds is an absolute sweet spot for us in terms of market.
0:36:22 > 0:36:24Those people who know this part of the world will know
0:36:24 > 0:36:27that there is a lot of inward migration from affluent parts
0:36:27 > 0:36:31of the market, so a lot of affluent family homes are being built here.
0:36:31 > 0:36:33Before they've bought the land,
0:36:33 > 0:36:36the company carries out reconnaissance on the location,
0:36:36 > 0:36:39studying their potential customers in forensic detail.
0:36:39 > 0:36:43The first thing we will do, is to send our teams into that
0:36:43 > 0:36:47market place, and find out who are the people that already live here?
0:36:47 > 0:36:52What income brackets are they in? Where are the best schools?
0:36:54 > 0:36:56We will build up a picture of the sort of people
0:36:56 > 0:36:58that will live on that site.
0:37:03 > 0:37:05CALA also hire the services
0:37:05 > 0:37:08of specialist market research companies.
0:37:08 > 0:37:14This one uses detailed consumer data to produce demographic "heat maps".
0:37:14 > 0:37:17What we've got here is a map of the surrounding area
0:37:17 > 0:37:21of Moreton-in-Marsh, it's about a five-mile radius all the way around.
0:37:21 > 0:37:24You've got two dominant colours here.
0:37:24 > 0:37:27The darker blue, we call "Lavish Lifestyles".
0:37:27 > 0:37:31Lavish Lifestyles are wealthy, suburban type neighbourhoods,
0:37:31 > 0:37:32with families.
0:37:32 > 0:37:36And then the lighter blue, these areas here, here, and here,
0:37:36 > 0:37:40all in very close proximity to Moreton-in-Marsh,
0:37:40 > 0:37:43those areas are dominated by what we call "Mature Money".
0:37:43 > 0:37:47Mature Money are the older, empty-nester-type neighbourhoods.
0:37:47 > 0:37:51These people are older families, whose children have grown up,
0:37:51 > 0:37:53and have likely flown the nest.
0:37:53 > 0:37:55So, any development in Moreton-in-Marsh
0:37:55 > 0:37:58is likely to be attractive to these, as they downsize.
0:37:58 > 0:38:01If you can attract the empty nesters who've got a lot
0:38:01 > 0:38:04of equity in their property, then building something
0:38:04 > 0:38:08which suits them is probably a very good idea.
0:38:08 > 0:38:11Having done their research, CALA targeted two key markets -
0:38:11 > 0:38:14affluent families and the empty nesters.
0:38:14 > 0:38:18That meant creating two separate show homes.
0:38:18 > 0:38:20One is aimed at the families. For them, an open plan
0:38:20 > 0:38:24kitchen/diner is essential, along with upmarket fittings.
0:38:24 > 0:38:27The clunk test on a good car door is something we try to achieve
0:38:27 > 0:38:32in our properties. We have typically German-engineered kitchens
0:38:32 > 0:38:35and you get a nice motion to the way the door will close,
0:38:35 > 0:38:38and I think those small details are very important.
0:38:40 > 0:38:44The second show home has been created for the empty nesters.
0:38:44 > 0:38:49Here, it's less Vorsprung Durch Technik, more Come Dine with Me.
0:38:49 > 0:38:52So empty nesters, they like a formal dining room,
0:38:52 > 0:38:56they like somewhere where they can bring their empty-nester friends,
0:38:56 > 0:38:57and have formal dinner parties.
0:38:57 > 0:39:00But as you can see, it is also traditionally designed,
0:39:00 > 0:39:02from an interior design point of view,
0:39:02 > 0:39:05with more traditional colours and styles and doors.
0:39:05 > 0:39:08CALA were swamped by interest from even more
0:39:08 > 0:39:12empty nesters than anticipated but the four-bedroom family houses
0:39:12 > 0:39:14didn't quite suit their requirements.
0:39:14 > 0:39:17We very often find the empty nester
0:39:17 > 0:39:20demands a larger house with fewer rooms.
0:39:20 > 0:39:24Typically, they've had children, they've gone through a life
0:39:24 > 0:39:28where they've accrued lots of furniture, sizeable furniture,
0:39:28 > 0:39:33lots of clothes, and they want space to store those things.
0:39:33 > 0:39:38The empty-nester house has large rooms but less of them.
0:39:38 > 0:39:41But it only takes a few swift alterations
0:39:41 > 0:39:44for a four-bedroom family house to be reborn
0:39:44 > 0:39:46as a three-bed empty-nester home.
0:39:46 > 0:39:50We sought a separate configuration which involved the removal
0:39:50 > 0:39:53of this wall, the merging of these two bedrooms into one,
0:39:53 > 0:39:55placing a new doorway across here,
0:39:55 > 0:39:57so fairly minimal construction changes
0:39:57 > 0:40:00but it offered a completely different market sector.
0:40:02 > 0:40:05Wealthy empty nesters may be flocking here,
0:40:05 > 0:40:08but with three-bedroom houses costing around £400,000,
0:40:08 > 0:40:12many others are priced out of this corner of the Cotswolds.
0:40:12 > 0:40:15In the south east of England, first-time buyers now face
0:40:15 > 0:40:18house prices more than five times their annual salary
0:40:18 > 0:40:22and property panic stories are rarely off the front pages.
0:40:25 > 0:40:29Spiralling prices have added even more political controversy to the mix.
0:40:29 > 0:40:32And for every bubble, there's a politician weighing in
0:40:32 > 0:40:36with a scheme to reshape the house-building industry.
0:40:36 > 0:40:41The gap between those who own a home and those who want one is widening.
0:40:41 > 0:40:44It's our job to help those first-time buyers
0:40:44 > 0:40:47who are unfairly priced out of the market
0:40:47 > 0:40:51Ten years ago, Deputy Prime Minister John Prescott was on a mission.
0:40:51 > 0:40:55Since entering office in 1997, he'd seen house prices more than double,
0:40:55 > 0:40:58and he wanted more affordable homes to be built.
0:40:58 > 0:41:01Well, I think it's always been an important priority,
0:41:01 > 0:41:03it should be for any government.
0:41:03 > 0:41:06You know, in the '50s, we were building 300,000,
0:41:06 > 0:41:09and we came down to 200,00, then it's down to 100,000,
0:41:09 > 0:41:11so there always was a desperate need.
0:41:11 > 0:41:16Prescott decided to invite the big house-building companies
0:41:16 > 0:41:17to a series of meetings.
0:41:17 > 0:41:21He soon realised this was an industry that would resist change.
0:41:21 > 0:41:24It took me two dinners. In the second dinner,
0:41:24 > 0:41:26I realised these guys worked together.
0:41:26 > 0:41:29They're sitting in their tables away from me and saying,
0:41:29 > 0:41:32"Well, we've got to try and look as if we're doing something,
0:41:32 > 0:41:34"but we know it's going to be less profitable
0:41:34 > 0:41:36"and do we want a guy like him on our backs?"
0:41:38 > 0:41:42Prescott decided the way to get them to build affordable homes
0:41:42 > 0:41:44was to launch a competition,
0:41:44 > 0:41:47challenging the builders to develop ways of constructing
0:41:47 > 0:41:49a family house for £60,000.
0:41:51 > 0:41:54The best of the designs were chosen for a series of pilot schemes,
0:41:54 > 0:41:56to be built on Government-owned land.
0:41:56 > 0:41:59This one, near Milton Keynes, was built by George Wimpey.
0:42:01 > 0:42:04We took part in it because we felt we had something to learn
0:42:04 > 0:42:08from looking at new build methodologies, and because
0:42:08 > 0:42:11we wanted to sort of interact with Government around their views
0:42:11 > 0:42:14on how the industry should develop, and we thought we should
0:42:14 > 0:42:18learn from that and also maybe help them to learn as well.
0:42:18 > 0:42:21These houses were built from factory-made components
0:42:21 > 0:42:23and designed for speedy assembly.
0:42:23 > 0:42:27To make his £60,000 homes cheaper, Prescott's idea
0:42:27 > 0:42:31was that the cost of land wouldn't be included in the final price.
0:42:31 > 0:42:33Future buyers would only pay for the construction costs,
0:42:33 > 0:42:37while the land remained in Government hands.
0:42:37 > 0:42:40I own the land, you pay the construction cost.
0:42:40 > 0:42:44Once you want to move on, I'll give you the share in the increase
0:42:44 > 0:42:48in value based on your construction costs, and I would keep the land.
0:42:48 > 0:42:53Over 100 of these hi tech homes were built in Milton Keynes,
0:42:53 > 0:42:56and now Lord Prescott is going to see them for himself.
0:43:04 > 0:43:07It's certainly different.
0:43:07 > 0:43:09It's the first time I've been to this site. There was a lot
0:43:09 > 0:43:12of discussion about it, so I was very interested to see
0:43:12 > 0:43:15how it had turned out. First impressions seem pretty good.
0:43:15 > 0:43:18My concern was to get affordable houses.
0:43:18 > 0:43:21Whether they've remained affordable given our market
0:43:21 > 0:43:23is a question I want to talk about.
0:43:23 > 0:43:27- Hello.- Hi, can I come in? How are you, Lucy. All right, Jonathan.
0:43:27 > 0:43:31So are you going to show me this, I've never seen it,
0:43:31 > 0:43:32talked a lot about it.
0:43:32 > 0:43:36This four-bedroom house was bought in 2008 by Jonathan and Lucy,
0:43:36 > 0:43:38who are both architects.
0:43:38 > 0:43:41First stop on the tour is the upstairs living room.
0:43:41 > 0:43:43Blimey, plenty of light.
0:43:43 > 0:43:46You've got the view at the end of the road.
0:43:46 > 0:43:50And when the trees come out here, you get the trees as well.
0:43:50 > 0:43:53I think what strikes you most, and it's emphasised by the colours
0:43:53 > 0:43:57- and the design is light. - Light.- Exactly.
0:43:57 > 0:43:5950% of the external is glass.
0:44:04 > 0:44:07These modern houses may be light and airy,
0:44:07 > 0:44:10but Lord Prescott wants to know if they're practical, too.
0:44:10 > 0:44:14Does it get coloured at all by weather conditions?
0:44:14 > 0:44:16They are white, at the end of the day,
0:44:16 > 0:44:18so you've got to clean them.
0:44:18 > 0:44:21But you can see the ones there, one's been cleaned.
0:44:21 > 0:44:22Oh, yes, you can see.
0:44:22 > 0:44:24The maintenance is pretty easy.
0:44:24 > 0:44:28It's literally just a guy with a mop from the floor.
0:44:28 > 0:44:31You can see, it's quite striking, isn't it?
0:44:31 > 0:44:36Lord Prescott is impressed, but the £60,000 question remains.
0:44:36 > 0:44:39How much did Lucy and Jonathan's home actually cost?
0:44:39 > 0:44:42What did you have to pay for it?
0:44:42 > 0:44:45In the end, after negotiations and the package discussed,
0:44:45 > 0:44:48we paid in the region of £300,000.
0:44:48 > 0:44:51300,000?
0:44:51 > 0:44:54That's five times, even if you don't allow for the land.
0:44:54 > 0:44:58Frankly, it just defeats what I'm trying to do, which is at least
0:44:58 > 0:45:02to provide for some people a house that is within their means,
0:45:02 > 0:45:03to have a choice to live here.
0:45:03 > 0:45:07For Lord Prescott, discovering what Lucy and Jonathan
0:45:07 > 0:45:09paid for their home has been a big surprise.
0:45:09 > 0:45:11But he thinks he knows who's to blame.
0:45:11 > 0:45:15Now, I've just discovered what really went on is that they built
0:45:15 > 0:45:18these 60,000 houses to a certain extent, some of them,
0:45:18 > 0:45:22and then sold them onto the market, at a market price.
0:45:22 > 0:45:25Now, that totally defeats what I'm trying to do.
0:45:25 > 0:45:28It's greed, it's profit, it's our builders.
0:45:29 > 0:45:32The company that built these homes say their final price
0:45:32 > 0:45:35wasn't all about profit - there was another factor.
0:45:35 > 0:45:40Lord Prescott's plan to remove the cost of land remained a pipe dream.
0:45:40 > 0:45:42In fact, Wimpey bought the land from the Government,
0:45:42 > 0:45:45and then included this in the final price.
0:45:45 > 0:45:47Those houses were not sold for £60,000
0:45:47 > 0:45:51and they weren't ever anticipated to be. The £60,000 was about
0:45:51 > 0:45:54the construction cost, but then when you add in the cost of the land
0:45:54 > 0:45:57and the infrastructure and everything else then, yeah,
0:45:57 > 0:46:01it was never going to be sort of providing a home for £60,000.
0:46:01 > 0:46:04The house builder argues it's impossible to build cheaper homes
0:46:04 > 0:46:07without factoring in the cost of land.
0:46:07 > 0:46:11John Prescott's challenge was for the industry to build homes,
0:46:11 > 0:46:12you know at a cost of £60,000.
0:46:12 > 0:46:15What I don't think he ever understood,
0:46:15 > 0:46:17and it changed a little bit over time,
0:46:17 > 0:46:20was that actually so much of the cost of a home is in land
0:46:20 > 0:46:22and infrastructure, that actually the construction cost
0:46:22 > 0:46:25of a home itself is not the biggest element of the challenge.
0:46:25 > 0:46:29So, in some ways that focus was never quite in the right place.
0:46:29 > 0:46:33In fact, the cost of constructing a new home, from materials to labour,
0:46:33 > 0:46:36is about 25% of the final price.
0:46:36 > 0:46:41That's around £50,000 on a £200,000.
0:46:41 > 0:46:44On larger developments, another big cost is local amenities,
0:46:44 > 0:46:45like affordable housing.
0:46:45 > 0:46:49This can account for another 25% of the price of a new house.
0:46:49 > 0:46:53You know, we'll do everything from building schools to providing
0:46:53 > 0:46:55free land for affordable housing
0:46:55 > 0:46:57or for, you know, other community facilities.
0:46:57 > 0:47:00Changing a major A-road junction and those sorts of things.
0:47:00 > 0:47:03So, actually those elements, which in a way are social gain
0:47:03 > 0:47:07for the wider community, actually can be greater than the cost
0:47:07 > 0:47:11of physically building the infrastructure of the house itself.
0:47:11 > 0:47:13After factoring in all the costs,
0:47:13 > 0:47:15from design to land and construction,
0:47:15 > 0:47:17there's one big area left - profit.
0:47:17 > 0:47:22That's a healthy 15%, or £30,000 on a house costing £200,000.
0:47:24 > 0:47:28House-building is very profitable because of the scarcity of land,
0:47:28 > 0:47:30the risk you're taking with capital.
0:47:30 > 0:47:33What you have to do is aim for a 20% return in the good times,
0:47:33 > 0:47:37so you're making more than nothing in the bad times,
0:47:37 > 0:47:39and over the cycle you're making a decent return
0:47:39 > 0:47:42to compensate shareholders for the risks you're taking.
0:47:42 > 0:47:46House builders' profits may protect them when things go bad,
0:47:46 > 0:47:49but for many of them, that still wasn't enough
0:47:49 > 0:47:53to survive the seismic shock of the last time boom turned to bust.
0:47:53 > 0:47:55World share prices have tumbled,
0:47:55 > 0:47:58the dollar and the pound have fallen.
0:47:58 > 0:48:01The global credit crunch is now a credit crisis.
0:48:01 > 0:48:07When the world financial crisis came along, and that completely
0:48:07 > 0:48:10froze the opportunity for people to raise mortgages,
0:48:10 > 0:48:15and made buyers very worried about buying a new house anyway,
0:48:15 > 0:48:19demand absolutely shrank for house builders very, very rapidly.
0:48:21 > 0:48:24We lost about 40% of our sales
0:48:24 > 0:48:29pretty much overnight, within a few months,
0:48:29 > 0:48:31so our turnover fell by 40%.
0:48:31 > 0:48:34It was the First World War in terms of the scale of losses.
0:48:34 > 0:48:39Huge amounts of capacity were lost and lots of people were laid off,
0:48:39 > 0:48:42and firms shrunk very, very dramatically in size.
0:48:44 > 0:48:47In the darkest days, I went back to not being able to sleep.
0:48:47 > 0:48:52It terrified me, all the years of effort, energy, risk and so on
0:48:52 > 0:48:55and so forth, to say nothing of all the staff, most of whom we'd had
0:48:55 > 0:48:58for at least ten years here. I could see the company
0:48:58 > 0:49:02going down the tubes, as they say, at that point.
0:49:03 > 0:49:05At the peak of the boom in the noughties,
0:49:05 > 0:49:08the big house builders had borrowed heavily to buy land,
0:49:08 > 0:49:12but with sales plummeting, they were unable to pay their debts.
0:49:12 > 0:49:15Through most of that period, we were confident that we could
0:49:15 > 0:49:19refinance the business. I mean, that was about a £2 billion refinancing,
0:49:19 > 0:49:23incredibly difficult and complex at that point in time.
0:49:23 > 0:49:24There were probably two points,
0:49:24 > 0:49:27two weekends when you really did look yourself in the mirror
0:49:27 > 0:49:29and say, "Are we really going to get through this?"
0:49:29 > 0:49:33In the depths of the recession, the house builders tried desperately
0:49:33 > 0:49:36to shift their unsold stock of homes.
0:49:36 > 0:49:39The way house builders survive of course is they stop buying land,
0:49:39 > 0:49:43they stop building homes and they focus everything on selling
0:49:43 > 0:49:46the product that's coming through the pipeline.
0:49:46 > 0:49:51But with the banks reluctant to lend, buyers were in short supply.
0:49:51 > 0:49:54After five years of sluggish sales, the government intervened,
0:49:54 > 0:49:58providing £3 billions' worth of state loans to boost
0:49:58 > 0:50:00the sales of new homes.
0:50:00 > 0:50:02From the beginning of next month,
0:50:02 > 0:50:06we will offer an equity loan worth up to 20% of the value of
0:50:06 > 0:50:10a new-build home to anyone looking to move up the housing ladder.
0:50:10 > 0:50:13It was a very big headline because it was part of the budget,
0:50:13 > 0:50:18and the home-buying public realised from this that actually,
0:50:18 > 0:50:21it was affordable to buy a new house.
0:50:21 > 0:50:24I think what the Chancellor did when he announced that,
0:50:24 > 0:50:28was effectively release a lot of pent-up demand very quickly,
0:50:28 > 0:50:31so we saw an awful lot of people. I mean, we saw in terms
0:50:31 > 0:50:34of our website traffic, it doubled on the day,
0:50:34 > 0:50:38and, to be honest, it's stayed very, very high ever since.
0:50:38 > 0:50:41The big house builders had survived,
0:50:41 > 0:50:44but thousands of smaller companies were less fortunate.
0:50:45 > 0:50:48Today, the house builders are bouncing back,
0:50:48 > 0:50:50but the recession has taught them
0:50:50 > 0:50:53a new set of rules for boosting their sales and profits.
0:50:53 > 0:50:57Number one - remember, with every boom, there will be a bust.
0:51:00 > 0:51:01Always take a long-term view.
0:51:01 > 0:51:04That if you get sucked into short-term decisions, you know,
0:51:04 > 0:51:07particularly in our industry, when the market is strong,
0:51:07 > 0:51:11then you don't protect the business for when it's weaker.
0:51:11 > 0:51:14So always standing back and saying, "OK, these are the conditions now,
0:51:14 > 0:51:18"what might they be in two years? In three years? In five years?"
0:51:18 > 0:51:19And that's coloured a lot of the way
0:51:19 > 0:51:22that we've set the business up since that period.
0:51:22 > 0:51:25Lesson number two in how to get ahead in today's market -
0:51:25 > 0:51:29they'll only build as many homes as they're sure they can sell.
0:51:29 > 0:51:30The industry as a whole,
0:51:30 > 0:51:34and certainly this company, Persimmon, are more cautious
0:51:34 > 0:51:38about the rate of build, and they relate their rate of build
0:51:38 > 0:51:40directly to their rate of sale.
0:51:40 > 0:51:45I mean, literally on a weekly basis. If we've sold three houses
0:51:45 > 0:51:49on that site that weekend, we might start building another
0:51:49 > 0:51:54three houses not the next week, but, you know, quite soon thereafter.
0:51:54 > 0:51:58Finally, they're very careful in choosing the locations
0:51:58 > 0:51:59where they build.
0:51:59 > 0:52:02I think the lessons that a lot of the house builders learned
0:52:02 > 0:52:06in the downturn was that the good stuff still sold and the stuff
0:52:06 > 0:52:10in more difficult markets really didn't, so going forward
0:52:10 > 0:52:13there is a mindset shift towards being in places
0:52:13 > 0:52:18with more desirable housing, more prime locations, if you like.
0:52:18 > 0:52:20More family housing cos there is an understanding
0:52:20 > 0:52:23that that still sells well even in downturns.
0:52:23 > 0:52:27For big companies like Barratt, that means looking to build on sites
0:52:27 > 0:52:31like this one in Cambridge, where there's a lot of demand from buyers.
0:52:31 > 0:52:35For me, it's about the discipline of making sure
0:52:35 > 0:52:38we invest in the right places, get the right sites,
0:52:38 > 0:52:41then get the right product on those sites.
0:52:41 > 0:52:44If you're buying the wrong sort of site, those are the ones
0:52:44 > 0:52:46that are going to be worst affected by a downturn.
0:52:48 > 0:52:52The house builders have learned new ways to prosper,
0:52:52 > 0:52:55but will this deliver the homes we need in the future?
0:52:55 > 0:52:59Last year, 130,000 new houses were built in the UK,
0:52:59 > 0:53:03up from the record lows of the recession, but still a long way
0:53:03 > 0:53:07short of the 200,000 needed to meet growing demand.
0:53:07 > 0:53:10All political parties seem to want at least 200,000 houses built.
0:53:10 > 0:53:15Again, that would take us back to previous cycle highs.
0:53:15 > 0:53:18The industry would love that and they would love there to be enough
0:53:18 > 0:53:21customers out there to build those 200,000 houses,
0:53:21 > 0:53:25but they are very badly burnt from what happened in the last downturn
0:53:25 > 0:53:28and they will avoid running volumes too far ahead.
0:53:28 > 0:53:32You only have to look at where new homes have been built over the
0:53:32 > 0:53:36last five years to see how cautious the house builders have become.
0:53:36 > 0:53:40You can see the red areas across the south-west of the country,
0:53:40 > 0:53:43from the South Midlands, and across the south-east. There's been quite
0:53:43 > 0:53:45a lot of development there.
0:53:45 > 0:53:48What this is showing is that there has been a lack of investment
0:53:48 > 0:53:50in new-build in the North of England.
0:53:50 > 0:53:55There is a sort of North/South divide in terms of house-building.
0:53:55 > 0:53:59With house builders focusing on the prosperous parts of the country,
0:53:59 > 0:54:03how will Britain get the homes we need for our growing population?
0:54:03 > 0:54:06Some suggest new garden cities.
0:54:06 > 0:54:09In the south-east, where the pressure is greatest,
0:54:09 > 0:54:12we're going to build new homes in Barking Riverside,
0:54:12 > 0:54:15regenerate Brent Cross and build the first new garden city
0:54:15 > 0:54:18in almost 100 years at Ebbsfleet.
0:54:21 > 0:54:24One new town that's already being promoted is Cranbrook,
0:54:24 > 0:54:27one of the country's largest housing developments.
0:54:27 > 0:54:30Houses range from two-bedroom apartments
0:54:30 > 0:54:33up to two-, three-, four- and five-bedroom homes
0:54:33 > 0:54:36with a range of material finishes locally sourced
0:54:36 > 0:54:40and in keeping with the surrounding Devon environment.
0:54:43 > 0:54:47This is the first phase of development, which is 1,100 houses.
0:54:47 > 0:54:51It's its own stand-alone community, the first new town
0:54:51 > 0:54:55built in Devon since the Middle Ages, and ultimately,
0:54:55 > 0:55:00we see it as a scheme of 7,000 homes with a population of 15,000 people.
0:55:02 > 0:55:06Cranbrook began more than a decade ago, when a group of house builders
0:55:06 > 0:55:10realised there was a shortage of homes in this part of Devon.
0:55:10 > 0:55:13We knew this area needed to grow,
0:55:13 > 0:55:15and without any real conurbations,
0:55:15 > 0:55:19and with only some small towns and villages,
0:55:19 > 0:55:21where was it going to grow?
0:55:21 > 0:55:24So we took a decision to seek to acquire land
0:55:24 > 0:55:26in a strategic location.
0:55:26 > 0:55:30After years of negotiation, the house builders gained permission
0:55:30 > 0:55:34to build thousands of new homes on an area of farming land near Exeter.
0:55:34 > 0:55:37When it's finished, Cranbrook will have its own schools,
0:55:37 > 0:55:39community centre, even a railway station.
0:55:39 > 0:55:42But the house builders aren't convinced new towns like this
0:55:42 > 0:55:45will solve the country's housing shortage.
0:55:45 > 0:55:50There may be situations where the likes of Cranbrook can be developed,
0:55:50 > 0:55:54but I don't think that they are the answer to the country's problems.
0:55:54 > 0:55:58I think the most sustainable places for us to build
0:55:58 > 0:56:02are in our existing towns and cities and service villages.
0:56:02 > 0:56:06That's where the needs are arising, that's where the viability
0:56:06 > 0:56:08of the town centres need to be underpinned
0:56:08 > 0:56:09with new people moving in.
0:56:09 > 0:56:14And I think that's where the main play of the housing market
0:56:14 > 0:56:16is going to occur over the next 20 years.
0:56:18 > 0:56:22The house builders may prefer to build around the edges
0:56:22 > 0:56:23of our towns and cities.
0:56:23 > 0:56:28Some experts say this won't solve the huge shortage of homes.
0:56:28 > 0:56:31It's time to consider radical ideas,
0:56:31 > 0:56:34like colonising land in the green belt.
0:56:34 > 0:56:36People often misunderstand the green belt,
0:56:36 > 0:56:39they think it's protecting environmentally important land
0:56:39 > 0:56:41and it isn't. It's really a planning designation.
0:56:41 > 0:56:44It's about keeping urban sprawl in check.
0:56:44 > 0:56:46And it's about keeping towns apart.
0:56:48 > 0:56:52The UK uses green belts in a way that no other country does
0:56:52 > 0:56:55and that is one of our fundamental problems.
0:56:55 > 0:56:59We cannot expand our cities, people cannot have the standards of living
0:56:59 > 0:57:03they could otherwise do, through the benefit of more housing
0:57:03 > 0:57:08and cheaper housing, and the green belt is what stops that happening.
0:57:08 > 0:57:12Ultimately, whatever the answer to Britain's housing woes,
0:57:12 > 0:57:15it's clear that new homes will remain in hot demand,
0:57:15 > 0:57:19and when the house builders are booming, it affects us all.
0:57:19 > 0:57:21Buying a home is the most important decision that people
0:57:21 > 0:57:23make financially in their lives.
0:57:23 > 0:57:27It impacts on so many aspects of their lives in so many ways.
0:57:27 > 0:57:29And that has a knock-on impact into our business
0:57:29 > 0:57:31and how challenging that is.
0:57:31 > 0:57:34Getting that right for individual customers against the constraints
0:57:34 > 0:57:37of a changing economic cycle and our planning system
0:57:37 > 0:57:38is always a challenge.
0:57:38 > 0:57:40If we get that right, we have a great business
0:57:40 > 0:57:43and we provide great products to our customers.
0:57:43 > 0:57:46After all, there's no other business with such a profound impact
0:57:46 > 0:57:49on our landscape and the way we live.
0:57:49 > 0:57:54I am proud of the fact that over the years Persimmon has built
0:57:54 > 0:58:00140,000 houses, and whether it's fancy bathrooms or nice kitchens
0:58:00 > 0:58:04or whatever else, the houses that we built over the years
0:58:04 > 0:58:07are so far different to what the houses were like
0:58:07 > 0:58:1140 or 50 years ago.
0:58:11 > 0:58:17I do feel that we have made a major contribution to the way
0:58:17 > 0:58:21in which people live in this day and age.
0:58:23 > 0:58:27The Open University delves further into how these businesses continue to boom.
0:58:27 > 0:58:31To discover more go to...
0:58:31 > 0:58:34and follow the links to The Open University,
0:58:34 > 0:58:37where you can also take part in an online survey.