Housebuilders are in a strong position to continue to grow as the industry continues to grow as the economy emerges from the worst of the COVID-19 pandemic.
Housebuilders had strong forward sales positions and were benefitting from strong flows of inward investment, Steve Wood, the chief executive of the National House-Building Council told delegates at the recent Housing Market Intelligence (HMI) conference in London.
Also speaking at HMI, Taylor Wimpey chief executive Pete Redfern told the conference that cancellation rates are down and the reliance on the Help to Buy scheme, which is being phased out, is also decreasing.
Only 27% of reservations in the first half of this year at Taylor Wimpey relied on Help to Buy, compared to 53% last year. The company’s optimistic take on the industry was illustrated, said Redfern, by a plan to open 50 new sales offices to sell its new homes over the next 24 months and the acquisition of plots to build 8,675 homes in the first half of 2021 compared to 2,015 plots in the first half of last year, when the UK was in the grip of the pandemic.
The economy may be slowing after a sharp bounce back in the immediate wake of the country opening up but there is unlikely to be a recession said David Smith, the economics editor of The Sunday Times. He told HMI: “The economy will grow 6-7% this year and 5% next year and shouldn’t go back into recession.”
An impact of the pandemic is that buyers are looking further afield for new homes.
Gráinne Gilmore, head of research at Zoopla, told the conference: “The pandemic has driven a reassessment of new homes. There is a search for space and new build commands a wider catchment area then re-sale. People will look further for new build.”
However, the housebuilding industry needs to respond to the government’s twin priorities to build more homes and meet environmental challenges through the Future Homes Standard, Neil Jefferson, the managing director of the Home Builders Federation told the conference.
“Sufficient lead times and predictability need to be factored into land deals, planning and design of homes,” said Jefferson.
The broadly positive tone from the HMI conference was echoed elsewhere. In a trading update, Barratt said only 21% of private sales between July 1 to October 10 relied on Help to Buy compared to 51% in the last full financial year.
The immediate bounce-back from the pandemic is expected to produce a 53% rise in the underlying value of private housing starts this year followed by another rise of 11% next year.
Glenigan’s economics director Allan Wilen says: “As existing sites were completed during the second half of 2020 and as housebuilders adapted to new working practices, housebuilders have switched their attention to new developments.
“Overall private housing starts are forecast to increase 53% this year and 11% in 2022. By the end of 2023, private housing project-starts are anticipated to reach 2017 levels.”
Despite the post-pandemic economic travails, the UK’s reliance on owning your own home puts housebuilders in a strong position.
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