New home volumes weakened by challenging economic conditions, reports NHBC

New figures released by the National House Building Council (NHBC), the UK’s largest provider of new home warranties and insurance, show that the number of new home registrations fell by 42% in Q2 2023 compared to the same period last year, with completions falling by 11%.

A total of 38,044 new homes were registered in the months of April, May and June, compared to 65,645 in Q2 2022.

The reduction is largely due to the accelerated registration volumes in Q2 2022 caused by changes to building regulations in relation to energy conservation. Completions also fell in the quarter, mainly due to some dampening of demand caused by rises in mortgage rates.

NHBC CEO Steve Wood explained: “It is hardly surprising that consumer demand for new homes began easing in the second quarter. With mortgage rates at a 15-year high, volumes of homes built for private sales have weakened, although this is partly offset by bulk sales into affordable housing markets.

“The Government’s renewed focus on housing policy is welcomed, however a more favourable environment will be reliant on a fall in inflation, easing of mortgage rates and action to address the key supply side constraints of planning and nutrient neutrality.”

There were 24,783 private sector registrations in Q2 2023, down -51% on Q2 2022. The rental sector saw a shallower decline, with 13,261 registrations in Q2 2023, down -14% on Q2 2022.

It was a mixed picture for registrations across the UK. London and Wales saw increases in Q2 of 9% and 1% respectively compared to the same period last year, while the North West (-67%), North East (-60%) and Eastern (-56%) regions saw the largest falls in registrations. The rise in London registrations may reflect a greater focus from builders on the alternative residential markets such as build to rent.

New home completions saw a lesser decline overall, down 11% on Q2 2022 to 35,936 in Q2 2023. New home completions in the private sector were down -18% in Q2 2023 to 24,746 and in the rental sector were up 8% compared to Q2 2022.

Mr Wood commented: “While new home registrations are down in Q2 2023, activity on site continues at a steady pace with builders focused on completing homes already in the pipeline. The increase in completions in the rental sector may signal a renewed focus on affordable housing, helping to address some of the underlying demand for new homes among those impacted by higher mortgage rates.”