Housebuilders are wrangling with supply chain disruption and rising material costs with the delivery of new homes under threat.
61 per cent of builders said these factors were the biggest obstacles adding pressure to their bottom line, in a survey of more than 50 English housebuilders by property consultancy Knight Frank.
Concerns are also mounting over land availability, which is expected to have the greatest impact on the sector over the next three months.
Eight out of ten builders said there was a “limited” or “very limited” availability of space.
Builders are increasingly worrying about the issue, with 21 per cent calling it a challenge in this quarter compared to 16 per cent in the second quarter.
The supply nightmare comes as there has been strong demand for new homes, with 36 per cent seeing site visits and reservations increased in the third quarter compared to the previous one. Half of builders said interest remained at the same level.
Justin Gaze, head of residential land at Knight Frank, said: “Build cost inflation is the most talked about topic in the land market at the moment, and it is anticipated that this will not ease in the short term.
“This, combined with delays in the planning system, are going to significantly impact the delivery of completed new homes in the market.”
Knight Frank’s senior research analyst, Anna Ward, said if build costs do not settle down “at a time of cooling house price growth and rate hikes, this will have a knock-on effect on land prices.”
Ward added: “In many cases, UK housebuilders are managing the rise in build costs due to house price inflation in sought after areas. Our survey reflects this, with over half of respondents saying the current rate of house price inflation is helping offset build cost increases.”