According to Steve Midgley, the managing director of Fairgrove Homes, small housebuilders in the UK are facing numerous challenges including falling demand, rising interest rates, labour shortages, and high material and wage costs. Midgley explains that it is taking longer for people to sell their homes, resulting in longer delays in exchanging contracts and putting more stress on working capital and work in progress. The cracks in the housebuilding market are becoming more evident, with major housebuilders like Barratt Developments and Taylor Wimpey scaling back their projects and experiencing a decline in profits.
To entice buyers, small housebuilders like Cameron Homes are offering discounts and free extras. Kate Tait, the land and planning director at Cameron Homes, states that buyers are taking longer to commit to purchasing a house due to uncertainty around interest rates. The recent increase in interest rates by the Bank of England has made people more risk-averse and hesitant to purchase homes early in the building process.
The housing downturn is impacting the wider economy, as housebuilding contributes about 3% to the UK’s GDP. Smaller construction firms are feeling the pain more than larger ones, as they rely more on debt and face challenges with delays in planning approvals. The construction industry has seen more insolvencies than any other sector in the past year.
The shortage of housing in the UK is a long-standing issue, with the Centre for Cities estimating a shortfall of 4.3 million homes that could have been built since the 1950s due to outdated planning regulations. The planning system is also considered challenging and politicized, leading to a failure to deliver the necessary amount of housing.
In addition to these challenges, the construction sector is experiencing shortages of skilled workers, such as bricklayers and plasterers, partly due to Brexit and an ageing workforce. The government has recently added these occupations to the shortage occupation list, making it easier for foreign builders to come to the UK. However, some believe that this action has come too late, as the industry is already slowing down.
Overall, small housebuilders in the UK are facing a tough market, with multiple obstacles to overcome. However, there is still demand for new builds, especially in good locations with competitive pricing.
Denial of responsibility! VigourTimes is an automatic aggregator of Global media. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, and all materials to their authors. For any complaint, please reach us at – [email protected]. We will take necessary action within 24 hours.
