It’s almost the new year and, after 2023 brought more than its fair share of challenges for the housebuilding industry, Chris Chiles, CEO of Elivia Homes, talks us through what we can expect to see in 2024.
As we stand at the threshold of 2024, the UK housing market is once again poised for yet another year of fluctuation, shaped largely by economic shifts.
The first few months of any new year are often always buoyant for new home sales following a pre-Christmas lull. The big difference of course in early 2024 could be that for some, this demand may not arrive as quickly as many would hope.
For the foreseeable future, interest and mortgage rates will not make a return to the lows seen prior to the summer of 2022 – the repercussions of which will continue to filter right across the housing market supply chain, with challenges no doubt being felt amongst trade partners and manufacturers.
House prices
In terms of house prices, widespread forecasts suggest a further decline in what for many years has been considered a sellers’ market, with offers below asking price continuing to be accepted as buyers attempt to tackle record-high mortgage rates.
However, at Elivia, we are still seeing demand outpace supply with buyers very much in the market for purchasing quality new build properties in the right locations, which have a strong focus on design and energy-efficient features.
Sustainable development is central to our ethos, and as an industry, we recognise that the heating and powering of homes is one of the biggest contributors to the UK’s GHG emissions. To reduce this going forward, we hope 2024 will bring a collective effort and clearer direction on sustainability standards with Low and Zero Carbon (LZC) technologies and Modern Methods of Construction more widely utilised. Now, however, these are expensive to procure from a limited pool of suppliers, meaning there is no great supply of super green homes.
If government incentives in 2024 could be linked to the sustainability performance of a development, SMEs who might otherwise struggle could afford to build greener and in doing so, improve standards and reduce emissions. This could be taken further with government-backed green mortgage schemes or additional Stamp Duty incentives linked to a home’s carbon performance, both of which could prove popular with housebuilders and homeowners.
Land delays
In 2023, the UK planning sector has been in crisis and the knock-on effect for housebuilding has been crippling, particularly at SME level.
Budget cuts and under-resourced planning departments have resulted in lengthy delays for validation, determination, clearance of conditions and the agreement of planning obligations and as such, many sites across the country have been stuck in limbo.
We would like to see the Sunak administration take immediate steps in 2024 to properly resource local authorities and the planning inspectorate to unblock the significant backlog of work. There also needs to be a longer-term national training and recruitment drive to encourage more planning officers, planning inspectors and other local authority positions into the sector.
Until this happens, the number of new developments which currently achieve timely planning permission will remain limited, to say the least, and without a clear housing plan in place and councils now having the ability to reject these plans entirely, we can’t help but feel these levels will continue to decrease further in the short term.
It’s now also the second time round for Housing Minister Lee Rowley who, in early December, said at a conference that the Conservatives can still live up to their 2019 manifesto promise to build a million new homes in the UK by the end of the parliament, even with the clock ticking. With a rapid churn of housing ministers — 16 people cycling through the role since 2010 — we hope Mr Rowley now gets a good long period in post to make a difference.
Predicting the future
Looking ahead, as an industry we need a cohesive housing strategy which effectively brings forward development land and associated infrastructure, and also puts a greater focus on affordable housing with support for SME developers.
Whilst no one can predict the future with complete accuracy, we can only hope to see mortgage rates ease back and affordability right across the country improve so that the sector as a whole can make steps back to stability, confidence and a more robust sector than it has been in 2023.
