Consumer demand for homes hits five-year low

43% of those surveyed said that the biggest barrier to building more homes was a lack available land.

Housing and money

Consumer demand for new homes has fallen by 8% over the last year to its lowest level since 2013, according to the latest Federation of Master Builders (FMB) House Builders’ Survey.

Each year, the survey tracks the main barriers on the ability of SME house builders to build new homes, both now and over the next three years.

As outlined, a lack of available and viable land was the most commonly cited constraint (43%) for the fifth year in a row.

This is also expected to be the top barrier over the next three years, increasing to 52%.

This was closely followed by the planning system at 42%, which was also expected to be the second biggest barrier in the future.

Respondents reporting a lack of finance to the company came below planning again at 39% – the lowest this has been since the survey began.

The number of respondents who cited a shortage of skilled workers also saw a dramatic drop this year from a high of 44% last year to a new low of 26%.

According to the FMB, this softening in respondents’ perception of the skills shortage is also reflected in the FMB’s State of Trade Survey (as reported by 24housing), which has seen those reporting shortages in key trades such as bricklayers, plasterers, and carpenters edge downwards.

Respondents’ assessment of buyer demand (out of five) has fallen steadily each year since 2016. However, the last year has seen the steepest decline since 2013.

When further prompted as to what was behind this fall in demand, just under half (48%) reported it was due to a lack of consumer confidence.

On the report, Brian Berry, CEO of the FMB, said: “Small house builders are starting to see the effects of Brexit uncertainty taking its toll on consumer confidence.

“Many prospective homeowners are clearly holding off buying until there is more political and economic certainty. Hopefully this is just a short-term pause and that, post Brexit, demand will pick up once again.

“If not, and we enter a downturn period, the government will need to consider how best to support SME house builders to avoid many firms leaving the sector.”

Berry added: “The main barriers facing small house builders have started to ease, but they are still present.

“This is the fifth consecutive year that small house builders have cited lack of access to available and viable land as the number-one barrier. Small sites are the bread and butter of SME development, but unfortunately local authorities’ Local Plans are still far too focused on large sites.”

He added that the increases in planning fees by 20% in January 2018 were supposed to lead to increased speed and delivery of planning services, but only 3% of members have seen any improvement since the rise.

“In fact, 38% of small builders have seen the performance of planning departments worsen.

“Builders are now paying more for an inferior service, which needs to be addressed urgently as part of the government’s proposals to accelerate the planning system,” Berry said.