Wednesday 9 October 2019 12:01 am

New home demand falls as buyers wait for clarity on Brexit

The demand for new homes has slumped to a six-year low as consumers delay buying property until a Brexit plan becomes clear.

New research shows that consumer demand for new homes has fallen eight per cent over the last year.

Read more: Housebuilder stocks facing a Brexit wrecking ball?

Small house building firms said current buyer demand is at 2.9 out of 5, down from 3.14 last year, and is expected to fall further to 2.75 next year.

Almost half of small developers attributed the slump to a lack of consumer confidence, according to the latest research from the Federation of Master Builders (FMB). 

FMB chief executive Brian Berry said: “Small house builders are starting to see the effects of Brexit uncertainty taking its toll on consumer confidence. 

“Many prospective homeowners are clearly holding off buying until there is more political and economic certainty.

“Hopefully this is just a short-term pause, and that post-Brexit, demand will pick up once again.

Read more: Berkeley Group defies Brexit jitters with robust London performance

“If not, and we enter a downturn period, the government will need to consider how best to support SME housebuilders to avoid many firms leaving the sector.” 

However, the main barriers to SME housebuilders – land availability, planning departments, access to land and access to skills – all improved over the last year. 

The number of developers reporting a shortage of skilled workers fell from 44 per cent in 2018 to 26 per cent this year.

Access to land is the main hurdle to development, with 43 per cent of builders citing this as their main problem, down from 59 per cent last year. 

The planning system is the second major hurdle, as 42 per cent of firms reported this as a barrier, compared to 51 per cent in 2018. The “inadequate resourcing of planning departments” is the driving cause of the problem, builders said. 

Read more: Brexit turmoil takes toll on FTSE housebuilder share prices

More than one third of firms said access to finance is a barrier to building new homes, however the number of developers citing this as an issue fell to an eight year low. 

However, reported concerns about the level of loan refusals hit the highest level in three years.

Main image credit: Getty