Private housebuilding springs to life in regional markets

The outlook for new private housebuilding work over the coming year has brightened in recent weeks.

After some tough times in 2023, an upturn in new housing output in January, and a series of encouraging industry surveys and announcements from major housebuilders, point to better times ahead for the sector, particularly in the North and the Midlands.

Recent falls in mortgage rates and the prospect of cuts in interest rates has given a lift to the overall housing market. The latest February RICS UK residential survey of estate agents shows a more positive trend in buyer enquiries and new listings, with sales expected to rise modestly in the near-term and gain further momentum over the year. Most UK regions showed a recovery in buyer interest.

Improving market

As the spring selling season gets underway, the major new housebuilders have also pointed to an improving market. Taylor Wimpey said recently that: “current trading showed some encouraging signs of improvement with reduced mortgage rates positively impacting affordability and confidence in our customer base.” So far this year, the firm’s net private sales rate for its homes stands at 0.67 per site per week, up from 0.62 in the period last year. Meanwhile, its sales cancellation rates are down.

Another major operator in the sector, Persimmon, said in early March that whilst it expected market conditions to remain ‘subdued’ during 2024, affordability had improved and it was positioning the business for sustainable future growth over the medium-term.

The firm plans to open 30 new sales outlets for the spring selling season and work towards expanding its outlet base back towards 300. In all, it expects to deliver 10,000-10,500 house completions this year, up from 9,922 last year.

Persimmon also noted that whilst trading in its southern and eastern counties remains more challenging, it has been offset by a more robust trading performance in the northern regions.

Regional brightspots

This pattern is reflected in the March edition of the Glenigan Construction Review which highlights various regional brightspots beyond the South East where opportunities for new housing work has been picking up.

It shows that the value of new housing project starts in the West Midlands rose to £854 million in the three months to February, up 19% compared to the same period a year ago. On the same basis, the East Midlands saw an 8% increase in new housing project starts to £768 million.

Meanwhile, the new work pipeline for housing shows signs of improving in the North West. Detailed planning approvals for new housing work in the region rose 13% to £1,974 million in the three months to February, making it the second most active region in the country. Residential planning approvals in the South West also rose 27% in the period and were worth £1,417 million.

Glenigan data provides numerous examples of new private housing projects of varying sizes which are set to go ahead in coming months. At Chorley in Lancashire for example, plans have been approved and work is due to start this autumn on a £16.05 million scheme of 110 houses and 8 flats for Storey Homes (Project ID: 21007585).

Elsewhere in Derby in the East Midlands, GMI Construction Group has been appointed as main contractor on a £30 million development of 202 flats for Godwin Developments at The Landmark in the town’s Phoenix Street. Work is due to start this coming June and run for 20 months (Project ID: 18129747).