The homebuilding market will make a strong comeback in 2023 after a year in which activity has cooled and is expected to cool further.
Despite the miniscule boom that followed the 2020 Covid lockdowns, 2021 saw a cooling in housebuilding thanks to the withdrawal of the temporary stamp duty cut and homebuyer confidence was affected by weak household incomes, rising taxes and interest rates.
According to analyst Glenigan’s latest construction forecasts for 2022-24, the cooling in housebuilding looks set to accelerate in 2022 thanks to inflation and further interest rate hikes. All this, according to the report, will mean that the activity of the housing construction sector will fall by 5% this year.
Private home starts in 2021 were worth £27.7bn in 2021 and are forecast to fall by 5% to £26.2bn in 2022.
The report predicts, however, that this rate will rise again by 14% in 2023 to £29.8bn, which will rise again by 1% to £30.2bn in 2024.
The construction market as a whole is expected to grow by 7% in 2023 and another 2% in 2024.
The report said of the private housing sector: “High inflation, weakening household incomes and rising interest rates are expected to dampen the recent pick-up in housing market activity. housing. We expect project start to fall by 5% in 2022, but when conditions become more favorable for housebuilders, the sector is poised to take advantage. Detailed planning approvals from the ‘private housing increased by 14% in 2021 and contract awards have strengthened steadily since mid-2020. We therefore expect a renewed recovery in the housing market towards the second half of the forecast period, helping project to begin a 14% recovery in 2023 and strengthen further in 2024.”
Meanwhile, the latest Halifax house price index shows that house prices defied any expectations of a slowdown and rose 1.8% in June, which was the twelfth consecutive monthly increase and the ‘biggest monthly increase since 2007.
Halifax managing director Russell Gallery said: “The UK housing market defied any expectations of a slowdown, with an average house price increase of 1.8% in June, the biggest monthly rise since the start of 2007. This means house prices have risen every month over the past year. , and have risen by 6.8% or £18,849 in cash so far in 2022, making has pushed the typical UK house price to another record high of £294,845.
He added: “Property prices so far appear to have been largely insulated from cost-of-living pressures. This is partly because, right now, the rising cost of living is feeling more among lower-income earners, who are typically less active in buying and selling homes.In contrast, higher-income earners are likely to be able to use the extra funds saved during the pandemic, with the latest industry data showing show that mortgage loans have increased by the highest amount since last September.
