New home building has ‘fallen significantly’ since EU referendum

Survey shows less than 4 in 10 house builders have increased their output over the last year while less than 1 in 3 think house building targets can be met.

 

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

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

A 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% of respondents had increased their rate of house building over the last year.  This compares to 50% of house builders 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% of respondents said their rate of house building had increased.

But this is down compared to 2016 when 60% of respondents said they had increased their rate.

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

And the survey finds that only 30% of house builders think the government’s ambition of building a million homes by 2020 will be achieved.

The main reasons house builders think the target will not be met are:

  • Not enough land (48% of respondents)
  • Planning permission taking too long (41%)
  • Non-availability of finance (37%).

The survey also asked house builders what they thought the government should do to increase house building with 36% of respondents saying it should release more publicly-owned land and 32% wanting incentives for large construction companies to develop more quickly.

Other findings from the survey show:

  • 52% of house builders are optimistic about the state of the housing market overall (18% are very optimistic) with this highest in London (65%);
  • Aasked what the biggest issue facing their company at the moment in terms of restricting the amount they can build, 28% of respondents cited land availability and 24% skills shortages;
  • The trades where those skills shortages are most acute is in general construction professions (33% of respondents) and bricklayers (17%);
  • the reliance of the house building industry on skilled itinerant workers from outside the UK: on average, house builders say non-UK citizens account for 20% of their labour force but this increases to 33% in London – one in three of the workforce;
  • 36% of respondents say they are worried about Brexit impacting the availability of workers because of freedom of movement restrictions (47% in London);
  • One in five house builders (26%) have found it harder to recruit staff from non-UK countries since the EU referendum, with this worst in London (38%);
  • Half of house builders – 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 house building 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 house builders 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.”

 

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