Housebuilders’ share prices have taken a pounding in recent months - losing
a third of their value in the first half of this year - as investors have
worried about the impact higher interest rates and a recession could have on
the sales of new homes.
But for now, construction activity across the private housing sector is
proving surprisingly resilient.
Whilst major housebuilders recognise that the economic outlook will
inevitably affect the wider housing market, most are continuing to report
healthy sales levels and remain positive on the outlook for the sector.
The promising medium-term prospects in the sector are reflected in the
latest Glenigan UK Construction Industry Forecast 2022-24. After a
26% rise last year, the value of underlying private housing project starts is
now predicted to dip by just 5% this year and to rebound with a 14% increase in
2023. A further small rise is pencilled in for 2024.
The positive message is echoed by some of the largest players in the sector.
Persimmon, the UK’s largest housebuilder, highlighted challenges with planning
delays and rising materials and labour costs in a trading update earlier this
month but said demand across the UK remains strong with healthy levels of
customer enquiries and low rates of cancellation.
The company has 300 active sites across the country and expects to bring a
further 70 on stream in the second half. This should enable it to deliver
14,500-15,000 completions this year, compared with 14,551 in 2021.
Meanwhile, Taylor Wimpey, which completed almost 14,100 homes last year, has
been expanding its land bank over the pandemic, adding a further 29,000 new
plots. This will allow it to increase the number of new homes sites which it
opens and create ‘material volume growth’ from 2023.
One new Taylor Wimpey housing project due to get underway early next year is
the £20.9 million Arboretum Phase 2 scheme at Haverhill in Suffolk. The
development involves around 145 new homes and work is set to continue for 17
months (Project ID: 19135566).
Glenigan data shows there is no shortage of major private housing projects
getting underway across the country which offer good opportunities for new
contracts for firms.
In North London, detailed plans have been granted and tenders are currently
being invited on an £82.5 million scheme of 272 flats (half private and half
social) at Ashley Road Depot in Haringey. Work is due to start on the project
next spring and continue for 24 months (Project ID: 22109399).
Meanwhile, in Bromsgrove, near Birmingham, plans have recently been approved
for a Bellway Homes scheme of 370 houses valued at £58.5 million. Work on the
scheme at Whitford Road is due to start early next year and will run for 20
months (Project ID: 22047387).
The continuing growth of build for rent is also helping to support
construction activity in the private housing sector. Glenigan is expecting
further growth in build to rent (BTR) projects over the next two years, mainly
on high-density schemes of flats in cities.
One BTR development where detailed plans have recently been submitted is a
£20.4 million scheme of 402 flats on a former gasworks site at Britannia Road
in Southampton. Work on the project by Hawkstone Properties is due to start
next summer and run for six months (Project ID: 21554397).
