Crying all the way to the (land) bank
If the Government really was hoping the volume house builders would come to their aid, actually build-out the many homes for which they enjoy planning consent and deliver the promised 300,000 new-build homes a year, they are in for a nasty shock.
It looks as if the approaching recession has forced builders back into land-banking mode.
Much ink has been spilled by builders to deny that, faced with recessions and falling house prices, they rapidly decelerate building and put their cash into buying land more cheaply than hitherto. But look what’s happening.
New figures have been released by Unlatch, a “homes sales progression and aftercare platform for developers and house builders”. They show that, In January 2020, there were 48,752 new-build homes listed for sale across Britain and – pandemic notwithstanding – by August 2021 that had only dropped a bit to 40,306.
This month, however, Unlatch found just 25,468 new-build listings on the market, an annual decline of 36.8% and a drop of 47.8% since the start of the pandemic.
Some of the biggest annual declines are in the regions where the market is supposed to be strongest. Year-on-year, the East of England is down 48.6%, the South East down 48.9% and the South West 51.3%. Even in the economically challenged North East, it’s down 27.4%.
Unlatch’s head of UK Lee Martin ascribes the fall to the global socio-economic situation – Ukraine and Brexit making materials more expensive and labour scarce, together with the “two-month hiatus to nominate a new prime minister”. He calls for builders to have greater freedom and less government intervention, as you might expect.
Of course, the local socio-economic situation is set to leave builders with lots of their expensive #WrongHomesWrongPlaces buildings on the market.
Indeed, with the imminent threat of millions of people facing a cold and hungry winter and food banks already running out of food, you might wonder if even HM Treasury might begin to question whether building vast numbers of up-market homes for sale is really going to be the answer to the country’s increasingly stricken economy.
Of course, it’s an ill-wind that blows nobody any good.
Even though a recent tweet from the Land Promoters’ and Developers’ Federation did go so far as to admit that things are “a little quieter than usual”, it still had good news for its members – their numbers have increased by two.
And in two weeks’ time they’ll be able to celebrate with a glass of champagne at the Federation’s annual lunch.