New supply of homes on the market falls, transactions plummet
This week saw the release of Zoopla’s House Price Index Report, which revealed that – whilst there had been a 6.0% increase in property prices over the past 12 months – the total stock of homes for sale is down by 26% when compared to 2020.
The property website also warned that this reduced stock is likely to continue into 2022, with new supply also reduced by 3.2% against 2020. Zoopla cited that supply constraints were most evident in houses up to £350k, as buyers searched for space amid changing demands as a result of the pandemic.
Meanwhile, the end of the stamp duty holiday at the end of June saw property transactions plummet by 63% between June and July, according to official figures from HMRC, who stated that this drop was “expected but noticeable”.
Not everybody agrees that the stamp duty holiday was the main contributor to rising property prices, though: think tank The Resolution Foundation argued this week that low interest rates and changes in home preferences were the main driver, and that the tax holiday was “wasteful”, with HMRC losing out on around £4.4bn of taxes as a result.
Material shortages ease slightly, but labour costs increase
An update by the Construction Leadership Council this week revealed that the holiday period – and a probable rise in order cancellations – has eased ongoing material supply issues, but that the lack of availability of HGV drivers are causing serious delivery issues across all regions.
The CLC also warned that it would be 2022 before material prices began to stabilise, with some manufacturers still expected to implement double-digit price increases.
Meanwhile, the ongoing effects of the current skills shortage crisis has resulted in the cost of on-site labour increasing by 3.6% in July, with Hudson Contract revealing that the average weekly earnings for self-employed tradespeople increased by £124 in the month to £904. The East Midlands felt the highest increase, with labour costs at £1,014 per week, driven by a rise in new regeneration, housing and infrastructure projects.
Relief as construction product marking changes delayed
This week saw industry leaders welcome the news that the planned product marking changes – due to come into effect from 1 January 2022 – have been delayed by a year.
A result of Brexit, the changes would have seen products which previously had CE markings move across to a new United Kingdom Conformity Assessed (UKCA) mark.
However, some have warned that the 12-month delay may not be long enough, with the UK still lacking the capacity and skills to carry out the required tests on thousands of items.