Housebuilding confidence a good foundation for boosting new home numbers

It’s been a positive year so far for the housebuilding industry.

This is reflected in the purchasing managers index for the sector, which is published by IHS Markit/CIPS on a monthly basis, and gives an excellent insight into activity levels.

The year started poorly, but from that point on housebuilding has performed really well, showing strong activity growth each month, particularly in July. While there was something of a dip in August, the research found confidence across construction companies that business activity would expand over the coming 12 months. 

It’s a similar story when you consider new home registrations. According to the latest data from NHBC, more than 15,800 new homes were registered to be built in July. That’s up by 35% on the same period last year.

It’s clear that there is good sentiment across the industry, and a desire to get homes built.

The role of the weather

One important factor when it comes to construction levels – whether we are talking about new homes or infrastructure projects – is, of course, the notorious British weather. It’s an area where there has been plenty of good news, too. 

We enjoyed a prolonged heatwave throughout the spring months, and this was then followed by a record-breaking summer. In fact, 2018 was the hottest summer on record for England, and the joint-hottest for the UK as a whole.

Anyone who has had any involvement with the world of property development will have their own horror stories of how an unexpected change in weather can cause significant delays, which can cause havoc with the profitability of projects. 

So often in Britain, our unpredictable climate throws a spanner into construction projects, with sudden downpours causing unforeseen delays and denting the money developers actually end up pocketing. 

As a result, developers are always likely to have at least one eye on the weather forecasts before moving ahead with a project. 

Brexit: the elephant in the room

Of course, the big hurdle that all developers, large or small, face is the looming prospect of Brexit. The truth is that we simply have no idea what Brexit will look like in a practical sense, yet the clock is ticking until the UK leaves the European Union on 29th March 2019.

That uncertainty is unsurprisingly acting as something of a brake on the ambitions of plenty of developers, who are opting to wait and see how things shake out before pushing on with projects. 

Thankfully, some certainty on how our relationship with the EU looks after our departure cannot be too far away, with an EU summit taking place next month. The EU has previously suggested that if there is to be a deal in place before Brexit actually happens, it will need to be outlined by November, so come what may we should have some answers sooner rather than later.

An end to the delays

Despite the encouraging levels of confidence around the housebuilding sector, we know from our own experience, and from discussions with other firms active in this space, that a significant number of development projects are being sat on and delayed rather than accelerating towards completion.

Not all of this is down to Brexit – there are other concerns, from planning permission worries to issues with financing that are causing developers to adopt a cautious approach.

As an industry, we need to do far more to help remove these obstacles and give small developers the support they need to kick on and deliver the homes the nation needs. We must make hay while the sun shines.

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