New-Build Completions Hampered By Rising Costs
Limited supply is prompting more buyers to consider new-builds but the sector is also suffering from a stock shortage, Savills warns.
Research by the agent has found that limited choice across the housing market, especially for larger second-hand properties, has prompted many buyers to consider new build for the first time.
However, the combination of limited construction materials and slow planning decisions means supply of new homes is declining.
Its analysis found completions have been declining for the past three consecutive quarters, with only 238,500 new homes being built in the year to the first quarter of 2022 – a 7% decrease on the peak of 255,000 at the same time in 2020.
George Cardale, head of residential development sales at Savills, said: “Bricks, cement and roofing products have all become increasingly difficult for housebuilders to source, as well as being more expensive to produce, due to the rising cost of energy.
“Not only is it increasingly costly for developers to build, but a fall in the number of consents granted since the peak of 2019 is creating intense competition for sites to build on.
“Meanwhile, across the UK, we are seeing an imbalance of buyer demand and the availability of new homes. There are people ready and waiting that are keen to move into their next home but stock continues to be an issue.”
The agent also explored how energy efficient new-builds are compared with secondhand homes.
Between 2018 – 2020, the majority of new builds transacted achieved a grade B on their energy performance certificates compared with a D for a second-hand detached, semi-detached or terraced property and C for a flat, according to the research.
Projected annual ‘core’ energy bills of new build vs second hand by the end of 2022
| New Build | Second Hand | |||||
| Property Type | Most common EPC rating transacted | Projected ‘core’ energy costs per year* | Most common EPC rating transacted | Projected ‘core’ energy costs per year* | Projected savings in energy costs per year by purchasing new build | % saving |
| Detached | B | £941 | D | £2,104 | £1,163 | 55% |
| Semi-detached | B | £744 | D | £1,793 | £1,049 | 59% |
| Terraced | B | £720 | D | £1,724 | £1,004 | 58% |
| Flat | B | £596 | C | £939 | £344 | 37% |
**Combined estimated cost of lighting, heating and hot water from EPCs on homes transacted between 2018-20, inflated by projected rises in energy bills; Source – Savills research using EPCs and HM Land Registry
Savills looked at energy bill savings for the same property type and found that those buying new build houses would be looking at potential bill savings of more than 50% when compared with second hand homes.
Sophie Tonge, research analyst at Savills, said: “Developers who make the extra effort to go beyond the minimum requirements are likely to better future-proof their developments and entice a larger pool of buyers who are increasingly motivated by cleaner and cheaper ways of living.”
Taxes And Restrictions Make Landlords Quit Rental Market
The clearest indication of the rate at which the private rented market is shrinking is revealed in new research by Propertymark.
It shows the number of properties available to rent through letting agents in the month of March halved between 2019 and 2022.
During the same four-year period, 94 per cent of landlords who removed their property from the rental market did so to sell it.
Over half of rental properties sold in March this year alone did not return to the private rented market.
Nathan Emerson, Propertymark’s chief executive, says: “Our research presents a worrying picture for private renters.
“The number of properties available to rent has been diminishing with a large portion of landlords choosing to sell their properties. A lack of property is the root cause for rent increases and rising figures on social housing lists.
“We know from our qualitative research that the most common reasons for landlords to choose to sell their properties and no longer provide homes are around risk, finances and viability.”
He continues: “Landlords and letting agents have been the subject of extreme legislation changes as the UK Government tries to improve the sector. However, without a middle ground, these changes are actually proving detrimental to those they are supposed to protect.
“Sadly we do not see this improving as the sector braces itself for more changes within the anticipated Renters’ Reform Bill and upcoming energy efficiency targets.”
Propertymark surveyed 443 agents working for businesses with a combined total of over 4,000 branches across all four UK nations.