Two words which I believe best sum up the new build housing market in 2020 are resilient and adaptable. Confidence has remained strong and we’ve all seen the heightened activity levels across the purchase market. Looking back on the year, we don’t need to dig too deep into the issues facing housebuilders in Q2 as these are well-documented and unavoidable. I’d prefer to focus on the second half of the year, the positive levels of government support seen throughout the housing market and the fact that the construction sector largely remained open.
Inevitably, the volume of new housing delivered was lower than desired or even required but this is excusable in light of lingering, and unpredictable, Covid-19 restrictions. Although it’s important to be aware of the figures as they stand. This dip in volume was outlined in recent data from the National House-Building Council which revealed that 123,151 new homes were registered in 2020. This figure represents a fall of 23% when compared to 2019 figures. In 2020, 115,455 new homes were completed, which is also 23% down on the previous year.
On a regional basis, the number of new home registrations fell in every UK region. Northern Ireland noted the greatest decline, with the figure falling by 38%. The South East of England and Scotland followed, both recording a decline of 28%. The data indicated that many UK cities saw greater falls in new home registrations than their wider regions. For example, Manchester declined by 42% annually compared with a 27% drop in the North West. Furthermore, new home registrations in the private sector fell by 26% to 81,067, with the affordable and build to rent sector seeing a fall of 16% to 42,084, compared to the previous year.
Focusing back on the positives, Q4 2020 saw the housebuilding sector pick up pace with 39,749 new homes registered. This is only 2% lower than in Q4 2019. Additionally, the NHBC registered 39,170 new home completions in Q4 2020, a fall of just 7% from the same quarter the previous year and an impressive 34% increase from Q3 2020.
This recovery to almost pre-pandemic levels should fill the new build market with renewed optimism. Looking forward, the construction sector has adapted well and adjustments to health and safety measures plus better planning and productivity could even result in a stronger and more timely delivery of new homes. These will compliment planning reforms and rising energy efficiency standards to help improve build quality.
In addition, the New Homes Quality Board has been established to champion quality new homes, consisting of permanently appointed members including representatives from housebuilders, warranty providers, consumer bodies, the finance sector and independents. During the coming months the board, chaired by Natalie Elphicke MP OBE, will oversee the introduction of a new industry code of practice. It will also manage the appointment of a New Homes Ombudsman Service which will provide support to buyers should disputes occur.
The government has also just announced that it is extending the legal completion deadline for the current Help to Buy scheme until 31 of May. In a statement, Homes England said: “Help to Buy will end on 31 March 2021, but homebuyers using the current scheme will have more time to complete their purchase. We are extending legal completion to 31 May 2021 due to delays caused by coronavirus. This allows an extra two months for homebuilders to complete the build and for homebuyers to legally complete and get the keys to their home.”
This decision provides some additional breathing space, and advisers will play an important role in helping buyers who are utilising this scheme to get to grips with how these changes affect them.
New build is playing an increasingly significant role within the wider mortgage market and it’s clear that maintaining housebuilding momentum remains a priority for policymakers. For intermediaries, the complexities attached to new build underline the importance of ensuring that they work closely with lenders who are experienced within this sector. And with demand for new build likely to grow, lenders are constantly evaluating their new build propositions meaning opportunities will continue to emerge for intermediaries and borrowers alike.
Craig Calder is director of mortgages at Barclays