'New construction prices have risen too quickly and in too short a time': Prefabricated homes take a hit

The construction has been in a deplorable state for a year and this also affects the success formula of the prefabricated house. “Our sales have declined and we do not expect a significant recovery,” says Eot Vanden Bussche van Huisman, a formula expert for fifty years.

The off-the-shelf approach has been very successful for decades. Is this story coming to an end?

“Not that. It remains the case that you save time and money compared to a classic construction project. But just like the entire construction sector, we also feel that sales have become much more difficult. We usually sell about 120 houses a year. Last year there were 86 houses. It should be noted that Sales in 2021 were great, with 156 homes sold. That's why, because we've been doing this for fifty years and therefore have a lot of experience, we can absorb this hit.

Don't have to cut staff or contracts with subcontractors?

We've scaled back somewhat, especially because we don't see this situation improving immediately in the next three years. We are targeting nearly a hundred homes in the coming years. Our gut feeling is that this could be better, because interest rates on mortgage loans are now falling again.

Is this formula more vulnerable because you are building a series of houses rather than one house at a time?

“The problem in our sector is actually that if we have a project of ten houses, we build all ten, even if only three are sold. It is more efficient to build several houses at once, especially in terms of cost – but in this scenario it will end You're left with seven unsold homes in inventory. When credit is cheap, it doesn't hurt us as much. But today it's also more expensive. So, we have to absorb higher financing costs for the inventory of homes that remain unsold longer. And that cuts into our margins “.

Will you build fewer homes at one time from now on?

“This is not easy: applications for permits are already underway for about 660 homes. This process takes a long time. The approach with multiple homes at once also remains effective. But while we used to start construction immediately as soon as the project was approved, we are now proceeding more cautiously. “We are only starting a project of four houses, for example, after two have already been sold. We want to reduce our inventory from about seventy houses to about forty.”

What are the main causes of this feeling of malaise?

“In short, new construction prices have risen too quickly and in too short a time. My estimates are that the costs of building a new home have increased by between 70 and 100 thousand euros in two years. This is an abnormal amount. It takes time for buyers to catch up The important reasons are rising material prices, labor costs and land becoming more scarce and therefore more expensive. In addition, loans have become more expensive due to rising interest rates, and since several years borrowing conditions have also changed. Today you have to contribute your own resources when you get You have a lot more mortgage than you did a few years ago.

Are you also feeling the impact of the construction shift that stipulates that no additional open space will be created in Flanders by 2040?

“Yes. Obtaining a permit for a project now takes much longer than before, because cities and municipalities want to preserve as much open space as possible. Therefore, construction projects regularly conflict with conditions set by cities, such as minimizing the loss of open space. As a result Therefore, sometimes these projects cannot go ahead.

Some point out that a new single-family home on a subdivision is becoming less attractive, in part because families are becoming smaller.

“I can only conclude that the number of people coming to our site is almost never decreasing. In 2022, we received 236,000 visitors, and last year 227,000. This small difference tells me that this housing model is still a dream in the minds of many people.