This morning, the Department for Levelling Up, Housing and Communities (DLUHC) published a report showing that, between 1 July and 30 September 2023, the number of dwellings where building work started on site was down 68%.
This figure marked a drop of 52% when compared to the same quarter of the previous year.
The number of dwellings completed stood a 39,990, a 1% increase when compared to the previous quarter and is a 5% decrease when compared to the same quarter of the previous year.
In light of this news, Newspage asked property and mortgage experts for their views:
Reaction:
Robert Timm, managing director at Sunland Mortgages Limited:
“These house-building numbers are extremely disappointing, but not surprising. Higher interest and mortgage rates, coupled with reduced demand, have seen some housebuilders hold off starting new developments.
“On top of that, there’s the usual red tape and legislation in getting new developments off the ground in the first place.
“The country has a real lack of available housing stock and, unless these numbers drastically improve in 2024, schemes such as the 1% deposit mortgages will never be able to get off the ground. If they do, house prices could skyrocket as more people compete for less property.”
Charles Breen, founder at Montgomery Financial:
“So much for the Government’s house-building target.
“Like most targets with the current gaggle of clowns leading the country, it will be missed.
“Sadly, this is just going to keep on compounding and exacerbating the current housing crisis. Any decrease in the number of houses being built will have dire consequences in the coming months, predominantly on younger people who are dreaming of home ownership.
“The decrease in house building is a cynical ploy from developers to constrain supply so as to keep the prices up and their profit margins high, and ultimately serve their shareholders.”
Stephen Perkins, managing director at Yellow Brick Mortgages:
“In a market with increasing building costs and house prices that are falling or static, it is no surprise to see builders scaling back their operations.
“Whilst they will complete plots that are agreed, many new sites will be delayed as builders sit on their land banks and wait for better market conditions to build and sell new homes for maximum margins for shareholders.
“Sadly this is the issue when all house building is in the private sector, especially when there is so much demand for new homes.”
Ranald Mitchell, director at Charwin Private Clients:
“The profound slowdown in home building shows that developers are not shifting stock, or at least, not making the margins required to stay in the game.
“However, this is a look over our shoulders at last year’s data, and with the prospect of 99% mortgages on the horizon, lower mortgage interest rates, as well as yet to be launched developer incentive schemes, a reinvigorated wave of buyers will return to the market.”
Darryl Dhoffer, mortgage expert at The Mortgage Expert:
“I’m not surprised at all by these latest figures, which show the shellacking the property market and construction sector received when mortgage rates went through the roof.
“Sadly, I expect the figures in the last quarter of the year to be even worse. If these don’t figures highlight the effects of higher mortgage rates and inflation to the Government and the Bank of England, then nothing will.”
Riz Malik, founder & director at R3 Mortgages:
“Rather than fighting amongst themselves. The government need to urgently collaborate with developers, both big and small, to create freehold starter homes accessible to first-time buyers.
“Additionally, it’s important to identify and eliminate the barriers that hinder this process.”
Graham Cox, founder at Self Employed Mortgage Hub:
“The 3rd quarter 2023 building work starts showed a 52% year-on-year decrease, which is a huge drop and illustrates the extent to which higher mortgage rates dampened demand for newly built properties.
“With building projects cancelled, paused or mothballed, it’s no wonder so many companies in the construction sector are in significant financial difficulty right now.
“Lower mortgage rates and, with luck, a lower base rate this year should start easing the pain.”
Rohit Kohli, director at The Mortgage Stop:
“Given the cost of borrowing in 2023 and the collapse in demand from buyers, it’s not surprising that builders paused or scrapped their plans in the second half of the year.
“With reduced stock, this is going to amplify the issues people are facing, pushing up prices as mortgage costs reduce and more buyers enter the market.
“If the 1% deposit scheme is introduced then this is only going to increase demand and again drive up prices and make homes even more unaffordable for the people that need the scheme.
“The Government needs to wake up and take housing seriously. Every area is in crisis, from renting and social housing to building.”
Samuel Mather-Holgate, independent financial adviser at Mather and Murray Financial:
“Under this government, house building has all but stopped. There is no incentive for house builders to build, no confidence in the market, higher interest rates, and no demand from first-time buyers.
“The situation is the worst that the industry has seen. Britain needs a fresh approach, and the Labour Party need to have ideas how they will stimulate this crucial area of the economy. Successive governments have failed.”
