One of the most promising sectors for new work opportunities in the months running up to Christmas is residential construction.
The prospect of lower mortgage rates and the traditional autumn upturn in the housing market have encouraged developers to start work on more new homes over the summer.
The latest Glenigan Index shows that private residential construction starts increased by 30% in the three months to the end of August compared to the previous quarter.
Glenigan economist Drilon Baca said: “It’s heartening to see project starts rising during the Index period. As market inflation and persistently high interest rates start to ease, we’re noticing an increasing confidence among developers which is starting to buoy the residential construction market.”
The upturn in residential construction activity comes against a more positive background amongst home buyers. Even before the Bank of England’s cut in interest rates to 5% in early August, mortgage approvals rose to a two-year high of 62,000 in July, up from 60,000 in June. Meanwhile, house prices rose at their fastest rate in two years in August, up by 4.3% compared to the month a year ago, according to the Halifax.
Upbeat messages have also been coming from the major quoted housebuilders over the summer. In August, Persimmon reported a current private forward order book worth £1.12 billion, up 28% from a year earlier.
Chief executive Dean Finch said: “Our view is that the market outlook is encouraging and we are well positioned to grow.” The firm expects to complete work on around 10,500 homes, this year, which is at the top end of previous guidance given to analysts.
One Persimmon development where Glenigan data shows detailed plans have been granted and work is due to start in the fourth quarter of this year is Bradley Park in York. The £25.7 million scheme involves 181 houses and 12 flats and is set to run for 18 months (Project ID: 23267692).
Meanwhile, Bellway has also recently reported an improvement in trading and growth in the number of outlets it builds on. Chief executive Jason Honeyman said: “We have been encouraged by the improvement in affordability during the year and the relative stability in mortgage interest rates since January 2024.”
The firm’s forward order book at the end of July increased to 5,144 homes, up from 4,411 homes a year earlier. It has also been more active in the land market making deals to buy 35 sites in the year just ended, compared to 19 previously.
Glenigan data shows details of numerous residential construction schemes which are set to get underway in the coming months. At Woodbury Manor at Hailsham in East Sussex (pictured), work on a £72.2 million Bellway scheme involving 181 houses, 39 flats, and a convenience store is set to start in October and run for 24 months after reserved matters have been granted (Project ID: 18024973).
The major housebuilders are also taking heart from the government’s planning reforms which should free up more green belt sites, even if the target to build 300,000 new homes a year looks ambitious. The industry built just under 235,000 new units in 2022/23.
Yet it may be that planners are already becoming more sympathetic towards new residential construction developments. Persimmon has secured detailed planning permission for new homes on 6,000 plots in the year to date. The firm said: “Encouragingly c. 1,000 of these were achieved in July following the new government taking office.”
