Second quarter of 2023 sees lowest approvals since HBF report began
The latest Housing Pipeline report from the Home Builders Federation has found that the number of planning permissions granted across Great Britain fell to the lowest level in the second quarter of 2023 since the report began in 2006.
Around 2,450 sites received permission in the period, reflecting a -10% decrease on the first quarter and a -20% fall when compared to the same period last year.
The number of homes approved during Q2 2023 fell by -16% on Q1 2023 to 62,681 – a fall of -13% against Q2 2022.
Halifax reports largest monthly fall since November 2022
Mortgage lender Halifax has published its house price index for August, revealing a -1.9% drop in the month.
Valuing the average property at £279,569, the fall is the highest monthly drop since November 2022, and is down by around £14,000 over the last year.
However, average prices remain around £40,000 above pre-pandemic levels.
All UK nations and the nine English regions registered a decline in annual house prices, with the South experiencing greater falls than the North.
Market activity levels slowed during August, and while there is always a seasonality effect at this time of year, it also isn’t surprising given the pace of mortgage rate increases over June and July.
Kim Kinnaird, Director, Halifax Mortgages
While these did ease last month, rates remain much higher compared to recent years.
This may well have prompted prospective buyers to defer transactions in the hope of some stability, and greater clarity on the future direction of rates in the coming months.
Consultant warns of longer slowdown than expected as housebuilding slump continues
Cost consultant Arcadis is forecasting that the construction industry is facing a longer and deeper slowdown than originally expected.
Citing the Government’s high interest rates, the growing cost of debt and a slowdown in public project delivery, the firm also stated in its latest Autumn report that material cost inflation seems to have subsided.
Conditions for our markets have deteriorated significantly over the summer.
Simon Rawlinson, Head of Strategic Research and Insight, Arcadis
Borrowing costs are expected to remain high for the next two years and prospects for the investment economy including house building and commercial development are likely to be further downgraded.
Meanwhile, the latest S&P Global / CIPS UK Construction Purchasing Managers’ Index for August has found that the slump in housebuilding activity accelerated in the month, slipping to 40.7 from 43.0 in July. Any score above 50 indicates growth.
The score for all sectors of construction was 50.8, down from 51.7 in July.
The rising cost of labour is also pushing tender prices up, according to cost consultant Turner & Townsend.
In a forecast which remains largely unchanged since June, the firm has predicted that real estate tender price inflation will reach 3.7% in 2023, falling to 2.7% in 2024.
Our industry is currently managing an incredibly complex landscape as we experience both softening demand and the continued input cost inflation.
Martin Sudweeks, UK Managing Director of Cost Management, Turner & Townsend
This is driven in large part by an endemic skills shortage that is pushing up labour costs – sector must work with government and education bodies to tackle the jobs market crunch.
Barratt reports weak reservations
Barratt Developments has reported a fall in completions of -3.9% during its full year to 30 June 2023, and has forecast total completions to be between 13,250 and 14,250 next year – a significant fall from the 17,206 homes built this year.
The UK’s largest developer also reported a weak reservation rate, at 0.42 per outlet per week from 01 July to 27 August, with the same period last year enjoying a rate of 0.60.
Over the year, the firm’s net private reservation rate was 0.55, compared to 0.81 last year. Pre-tax profit was in line with expectations, at £884.3m.
We have delivered a strong operational performance in a challenging operating environment.
David Thomas, Chief Executive, Barratt Developments
Customers continue to face cost of living and mortgage affordability challenges, and new developments are increasingly constrained by an ineffective planning system.
Housing View 