The general housing
market might be slowing but the message from major housebuilders suggests new
housing construction remains in good shape.
The sector seems
largely untroubled by factors - such as high stamp duty and fragile consumer
confidence – which are holding back activity in the existing homes sector.
Most indicators
point to a weakening general housing market. Although the regional picture
varies, figures from Nationwide suggest house prices nationally fell by 0.2 per
cent in March and annual growth has slowed to a seven-month low of 2.1%.
Meanwhile, Bank of England figures show mortgage approvals in February were
below expectations having fallen by nearly 5% to 63,910.
But the latest
results from quoted housebuilders suggest a dual housing market is emerging
with a thriving new homes sector contrasting with a subdued market for existing
homes. Barratt Developments, Bellway and Taylor Wimpey have all seen a positive
start to the Spring selling season. All report healthy sales and increased land
purchases together with plans for further growth in the volume of building
projects this year.
The encouraging
picture on new build homes activity is reflected in Glenigan’s Construction
market analysis. It shows that the number of private housing units included in
detailed planning applications entering the pipeline surged by 19% to 166,341
units in 2017. In the third quarter alone, Glenigan recorded approvals for
81,300 units on private housing building projects, up 17% on a year earlier.
Continuing high
employment, low interest rates and a competitive mortgage market, plus the £10
billion injection into Help to Buy announced by the Chancellor in October have
all helped new homes construction market trends.
"With good
consumer demand, a healthy forward order book and a robust balance sheet…we
have had a strong first half and we continue to deliver against our operational
and financial objectives,” said David Thomas, chief executive of the country’s
largest housebuilder, Barratt Developments. The firm’s completions rose by 2%
to 7,324 in the half up to December and net private reservations are currently
running up 6.5%. As of mid-February, the firm’s total forward sales were up 2%
at £3,078 million.
In a mark of its
confidence in 2018, Barratt dramatically increased its land purchases to £641
million, up from £328.2 million previously, as part of its plans to boost
volumes. A new division in Cambridgeshire is among its plans to meet demand.
Bellway’s recent
interims showed its forward order book at mid-March was up almost 8% in value
terms on last year and its volumes slightly ahead at 5, 485 homes. Chairman
John Watson said: “This strong sales position is likely to be maintained in the
second half of the year, during which time the group expects to open some 52
new outlets.”
The firm expects to
increase building project volumes by 600 to over 10,000 homes for the full year
for the first time in its history. It has also invested heavily in land,
contracting to buy 6,726 plots, up from 6,287 previously.
Unveiling final
results in February, Taylor Wimpey chief executive Peter Redfern said: “We have
been encouraged by early trading patterns at the start to the year and despite
some wider macroeconomic uncertainty, consumer confidence remains robust and market
fundamentals are solid.”
The group has a
strong order book for 8,415 homes and in a mark of its confidence it bought
8,040 plots last year, up from 6,355 plots previously.
