Housing productivity

James Dearsley highlighted an interesting article by Bruce Thompson on the lack of innovation in the residential development sector.  The persistence of traditional technologies and business models has been a long term refrain.  The article highlights the consequent and longstanding weak productivity performance of the construction sector.  Output per worker has barely changed for decades.  It seems that technological innovation has had minimal effects on the construction sector compared to the manufacturing and services sectors (see here for a detailed overview).  I’m not convinced by some of the rationales put forward by Bruce Thompson.  “… margins are razor thin” – really? Not in the UK.  “Risk, the cornerstone of innovation, is often shunned in housing development.” –  I’m not convinced.  The whole speculative residential development process is saturated with risk.

There are major reasons why house builders and contractors would be expected to embrace technological innovation – competitive advantage, shortages of skilled labour, quality improvements etc.  Given that it’s an international issue, low productivity growth definitely seems to be a sectoral rather than a national issue.

However it’s measured, this is affecting my productivity…


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