The speculative housebuilding industry in the nineteen seventies

The aim of this thesis is to describe and provide explanations for changes in the structure of the speculative housebuilding industry in the 1970s. It is argued in Chapter One that previous analyses of the housing market have been based on an inadequate understanding of the structure of the industry and that the effect of changes in structure on the nature of the industry's response to market conditions has been largely ignored. Using established theoretical approaches discussed in Chapter Two, it is argued in Chapters Three, Four and Five that the production of housing is subject to various forms of scale economies which have contributed to but not determined changes in the structure of the industry. Though technological scale economies exist, it is shown that the more significant advantages to size of firm are access to land banks and access to long term finance. In Chapter Six a simple computer simulation is used to test the significance of probable scale economies and the impact of the economic events of the 1970s on a hypothetical firm; the output of the simulation seems to confirm the relative unimportance of technological economies and the overwhelming impact of land purchase timing and housebuilding density. Chapters Seven and Eight develop a detailed description of the housebuilding industry on Merseyside and give a more general account of the industry in the UK as a whole. The financial histories of different types of firm are analysed through a number of case studies and it is shown that though the decade was inevitably a difficult one for some, it also provided exceptional opportunities for those which decided to expand rapidly but avoided the dangers of over and under gearing. The final chapter draws a number of specific conclusions: that the degree of concentration in the industry has increased and that this is not merely a cyclical phenomenon; that the concentration occurred as the resultant of many different changes, acquisition and merger playing a significant but not dominant part. The composition of the industry has changed, with the more specialised firms and divisions acquiring larger market share. Finally, it is argued that the industry's response to demand conditions cannot be analysed on simple mechanistic assumptions, for the individual response of dominant firms has become a factor of real significance.