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... means that there will be further sharp cuts in house building product manufacturing capacity & in skills. So, if and when the house building recovery arrives, capacity & skills constraints mean that the recovery will take longer & cost substantially more. (13/end)
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... & it is increasingly likely that house building completions will also fall in 2027 as well, due to the lag effects of both the affordability issues & cost rises on house builders. Plus, a 4th & potentially 5th successive annual fall in house building also... (12/n)
#ukconstruction #ukhousing
... from 2026 Q3 & Q4 we are likely to see the full impacts of mortgage rate rises on major house builder demand & the full effect of cost rises. Overall, what this means is that 2026 will see a further fall in house building completions, a 4th successive fall &... (11/n)
#ukconstruction #ukhousing
Most major house builders have forward sales until Summer based on homebuyers with mortgages already approved so demand should hold up near-term but smaller house builder demand will be hit first (& they will also be hit first by the cost increases) whilst... (10/n)
#ukconstruction #ukhousing
... financial markets are currently pricing in 2 interest rate rises for 2026 (compared with 2 interest rate cuts they were expecting just a month ago) & so further increases in mortgage rates can be expected as those rate rises feed through, which will hit demand. (9/n)
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In terms of affordability, it was already a key issue for many house builders last year & since the Middle Eastern conflict mortgage rates have already risen sharply (the average 2-year fixed mortgage rate rose from 4.83% at the end of February to 5.84% so far &... (8/n)
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This means that additional government costs on the house building supply chain this year & expected double-digit % construction product price rises due to the Middle Eastern conflict will be coming from an already high base & further hit house builder site viability. (7/n)
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Even after construction products price inflation spikes in 2021 & 2022 slowed, a lot of input cost rises were baked in (wages, industrial energy costs etc.) so even in January 2026 construction products prices were 41.6% higher than in January 2020, pre-pandemic. (6/n)
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It's worth noting that construction products price inflation peaked at 23.5% after the global supply chain issues in 2021 & it peaked at 25.3% after the energy & commodity price spikes following Russia's invasion of Ukraine in 2022. (5/n)
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These additional government costs on house building occur at a time when we expect another spike in construction products price inflation due to the impacts of Middle Eastern conflict on energy, fuel, commodities, shipping costs & manufacturing costs. (4/n)
#ukconstruction #ukhousing
... on 1 July the government's 50% import tariff on steel products (including products we don't make in the UK) comes into effect & in October the Building Safety Levy comes in, all of which increase house building costs and hit site viability even further. (3/n)
#ukconstruction #ukhousing
Site viability is a key problem due to all of the government's additional costs on house building, which will continue to increase this year. Today, the government doubles the lower rate of Landfill Tax, which will increase the cost of house building, whilst... (2/n)
#ukconstruction #ukhousing
Given that house building completions in England in 2025 fell by 8%, a 3rd successive fall according to MHCLG, it's worth noting that site viability & affordability were not only the biggest house building issues last year, but they will get worse this year. (1/n)
#ukconstruction #ukhousing
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