Building a House During a Recession

Consultant and project management expert Mike Hardwick discusses how the coronovirus could impact build projects, drawing parallels to the 2008 economic recession
by Mike Hardwick
1st May 2020

“May you live in interesting times” is an old curse, and I think we can all agree we’re doing that in spades. As I type, the country and most of the rest of the world has gone into lockdown due to Covid-19. Just about every aspect of normal life is being rewritten and things are unlikely to be the same again.

It makes writing this piece seem rather insignificant by comparison and no one can say with any certainty what sort of state we are going to be in when this is over. People will be worrying for their jobs, particularly those running or working for small businesses, and with that comes concerns for future home building projects. The good news is that the government has advised that construction work can carry on if social distancing and other health and safety rules are followed.

Most large sites have been closed, but smaller sites, such as self builds, are proving easier to manage under the new restrictions and work is continuing, albeit more slowly.

Georgian house with glass extension

This couple employed Chiswick. Architects to design their renovation project after embarking on a project during the 2008 recession. Image: Cross Harris

When the economy takes a massive hit like this, it can seem like a hopeless situation for everyone. However, I think back to 2008 and the last time we had a comparable economic shock. It was then that I witnessed the best value-for-money self build I’ve come across to date.

Just when everything else in the construction industry was closing down due to the recession, a small general building company put in a labour-only bid to construct a home for the client of a package company I was working for at the time.

Their quote was remarkably low – fully £100,000 less than the most expensive bid received for the same work. We did our due diligence, took and checked out references and went through the quote with a fine-tooth comb.

Everything checked out and at the price quoted, the client was willing to take a punt on this incredibly low quote. He did, and less than a year later a beautiful new home was constructed on time. It was built to a fantastic standard and bang on budget with what turned out to be an excellent builder.

Learn more: 11 Affordable Homes Built for Under £200,000

Years later, I met up with the builder who took on this job. I asked him why he was so much cheaper than everyone else on the job back in the post-crash recession. The answer was survival; he needed a job to keep his company ticking over. He confided in me that he made absolutely no profit on the job, but that it kept his company afloat and that they had survived to grow when the economy recovered.

So although things look dark at the moment, every cloud has a silver lining, and if you are about to take on a project, the likely recession to come could work in your favour. As the big boys shut up shop waiting for things to improve, individual trades will be eager to get work elsewhere to keep their own cash flow going. We self builders can be their lifeline.
Now could be the time to be bold and take the plunge.

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