The private newbuild housing sector should probably be considered as a collection of regional markets, with some areas -particularly London – having unique characteristics
Take a look at our 5 key facts for this sector:
- Since 2015, there has been year on year growth in GB private completions, albeit unevenly, reaching around 165,000 in 2019. Contractors output has also grown strongly, at a decreasing rate, to £45bn.
- The key drivers have been a combination of steady consumer confidence and wage inflation, historic low mortgage interest rates and the Help to Buy (HTB) programme in England and equivalent schemes in the devolved nations. HTB accounts for around a third of legal completions in England.
- In 2020, completions are forecast to fall by around a third on 2019 due to the impact of covid-19 and the lockdown; the subsequent temporary closure of building sites after 24 March and the easing of restrictions two months later. Although sites are reportedly working at c. 80% of productivity, the focus has been on completions, with starts reportedly low.
- The Chancellor’s implementation of a 9-month Stamp Duty ‘holiday’ for England and Northern Ireland was introduced on 8 July to re-start activity in the housing market, through raising the 0% threshold from £125k to £500k. However, since 2017 first-time buyers have been exempt from paying the tax on the first £300k on properties with sales values up to £500k. As these account for a significant proportion of newbuild sales, the ‘holiday’ will only have a limited impact on demand here.
- Over the medium term, it is expected covid-19 will persist well into 2021 and current conditions in the housebuilding industry will continue, exacerbated by the ramifications of the UK leaving the EU; the impact of a likely ‘hard Brexit’ with trade negotiations still at an impasse as of August.
