New survey shows housebuilding rate declining

Construction of new homes has fallen significantly since the EU referendum, according to a new survey of housebuilding companies published today.

Housebuilders are also sceptical that the government’s target of building one million new homes by 2020 will be met, the survey shows.

The poll of more than 400 housebuilding companies in England was carried out for McBains, the leading construction consulting and design agency, and is published shortly after the Chancellor confirmed ambitious housebuilding targets in the Budget.

The survey shows just 38 per cent of respondents had increased their rate of housebuilding over the last year.  This compares to 50 per cent of housebuilders when asked the same question in a previous survey undertaken for McBains in May 2016 before the EU referendum.

London remains the area where the rate has increased most over the last year (50 per cent of respondents said their rate of housebuilding had increased), but this is down compared to 2016 (when 60 per cent of respondents said they had increased their rate).

Housebuilders blamed the decrease on a weakening of demand (38 per cent of respondents), not enough skilled labour (22 per cent), non-availability of finance (22 per cent) and planning permission taking too long (22 per cent).

The survey finds that only 30 per cent of housebuilders think the government’s ambition of building a million homes by 2020 will be achieved.

The main reasons housebuilders think the target will not be met are: not enough land (48 per cent of respondents), planning permission taking too long (41 per cent) and non-availability of finance (37 per cent).

The survey also asked housebuilders what they thought the government should do to increase housebuilding.

36 per cent of respondents said it should release more publicly-owned land and 32 per cent think they should incentivise large construction companies to develop more quickly.

Other findings from the survey show:

  • 52 per cent of housebuilders are optimistic about the state of the housing market overall (18 per cent are very optimistic) with this highest in London (65 per cent);
  • asked what the biggest issue facing their company at the moment in terms of restricting the amount they can build, 28 per cent of respondents cited land availability and 24 per cent skills shortages;
  • the trades where those skills shortages are most acute is in general construction professions (33 per cent of respondents) and bricklayers (17 per cent);
  • the reliance of the housebuilding industry on skilled itinerant workers from outside the UK: on average, housebuilders say non-UK citizens account for 20 per cent of their labour force but this increases to 33 per cent in London – one in three of the workforce;
  • 36 per cent of respondents say they are worried about Brexit impacting the availability of workers because of freedom of movement restrictions (47 per cent in London);
  • one in five housebuilders (26 per cent) have found it harder to recruit staff from non-UK countries since the EU referendum, with this worst in London (38 per cent);
  • half of housebuilders – and almost six in 10 in London – are also worried about the impact Brexit will have on their business in terms of fewer properties bought by overseas buyers.

Michael Thirkettle, Chief Executive of McBains, said:

“This survey shows the shadow of Brexit still looms large over the housebuilding industry.”

“Uncertainty over the terms of EU withdrawal are having a real impact, with the survey showing a weakening of demand because UK investors are biding their time on committing to new projects.”

“Not enough land is the reason most housebuilders think the government’s target for a million new homes to be built by 2020 will not be achieved.  The industry was hoping for the Budget to provide a shot in the arm for growth, such as freeing up more land like greenbelt and simplifying planning permission.  Yet although the Chancellor promised to introduce planning reforms to ensure more land is made available, there was no detail on how this would be achieved.”