Slowdown in new homes predicted

The latest figures in Housing Today suggest that a fall from 178,000 to 110,000 in new home starts should be expected next year. House prices are expected to fall by over 10% with the increase in mortgage interest rates and possible further rate rises to curb inflation.

Research consultancy, Capital Economics, has predicted a fall of nearly 38% in new housing starts in the next year and with repayments on an average priced home with a 75% loan to value mortgage almost doubling, a hit on buying power will inevitably create a drop in housing prices.

Developers who rely on cost-effective lending are likely to have difficult decisions to make to ensure their schemes are financially viable so how will this affect TRA members?

Nick Boulton, chief executive of the TRA, said: “TRA members, as an important part of the house building supply chain, are not immune to the effects of the recent economic turmoil. However, many of our members have years of experience in dealing with the peaks and troughs in house building over recent decades.

“Looking at other markets can be helpful.  There might be new opportunities in niche areas such as promoting your products to self-builders and attending self-build shows. Members can also look at raising awareness to those in the extension market or attract smaller house builders.

“Industrial construction especially last mile warehousing remains a strong sector and while wood products may not be historically the first choice in the UK, there are many other European countries who recognise the carbon benefits of wood construction in the industrial sector.

“Keeping your eye on your company’s cashflow and making sure you aren’t over stocking is another area that can take the strain away. Compared with last year, timber supplies are strong and there’s lots of stock here in the UK, so members should make the most of what’s available and try to order only what they need to fulfil their orderbook.

“Being open with your customers is important, too. Keep good communication and let them know of any changes in service or price with as much notice as possible.  Look at ways to reduce unnecessary expenses and ask your team for their ideas on how to weather the storm. They know how your company operates and will have insight into ways to create efficiencies.”

The forecasts suggest that the market will settle and recover to 130,000 units in 2024 bringing with it a little more stability for those in the house building industry.