House prices: Expert discusses 'interesting' pricing differences
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Building work had been constrained since the first lockdown through both restrictions themselves and subsequent issues with the supply of labour and materials. Despite completions taking a hit during this time, new projects are starting to pick up according to building control figures published by the Government and Office for National Statistics (ONS) today. Starts on new build dwellings picked up 16 percent between July and September in 2021 compared with the year before. Steve Turner, Communications Director at the Home Builders Federation, told Express.co.uk the “industry is in a relatively good place” adding that it had doubled output over the last decade.
Demand for new build homes soared in 2021 aided by a low interest rate environment and the Government’s stamp duty holiday.
Mr Turner suggested demand was continuing meaning builders would increase supply but warned smaller firms in particular were dealing with materials and labour shortages.
One of the UK’s largest house builders, Persimmon, today announced its profits has pushed up past pre-pandemic levels by one percent.
The company increased its new home completions from 13,575 in 2020 to 14,551 in 2021, although it still remains below 2019’s figure of 15,855.
Group Chief Executive of Persimmon, Dean Finch, said: “Whilst the industry continues to face the ongoing operational and economic challenges as a consequence of the pandemic, particularly as the Omicron outbreak unfolded in the last six weeks of the year, the Group continues to manage these ongoing challenges comprehensively.
“The long term fundamentals of the UK housing market remain strong and I am confident of Persimmon’s future success.”
Mr Turner explained while new builds didn’t have a major impact on house prices increased output in the long run would help address supply and demand balances with the UK having suffered an undersupply of housing for decades.
The Government has set a target to build 300,000 new houses a year with industry output reaching 240,000 before the pandemic.
The Home Builders Federation have warned though that the planning system and shortages of building supplies could threaten this.
Mr Turner suggested Government needed to “get focus back” with improvements to the planning system.
While the Government is exploring reforms he said “The biggest challenge is getting the existing system working properly” adding it currently takes “far too long to get a site through the planning system.”
According to Government data planning approvals for new housing units took a major hit during the pandemic, falling 10 percent.
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Meanwhile demand for houses may start to cool this year if further interest rate hikes follow from the Bank of England.
The Bank raised rates in December with many mortgage providers now adjusting their own rates.
Mr Turner commented that it was “tough for first-time buyers even in a low interest rate environment” meaning demand could fall for this group.
Figures from the Bank of England this morning suggested demand for mortgages for new purchases was falling with a greater focus instead on re-mortgaging.
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