Planning permissions for home improvements falls to lowest level in a decade
Planning permissions for home renovations has plummeted as the low consumer confidence permeates the construction industry.
Consents for developments in England totalled 151,177 in the 12 months to March, 27 per cent below the 10-year average, according to data from Savills.
This is despite a 24 per cent uplift in housing transactions as buyers rushed to take advantage of lower mortgage rates and stamp duty relief for first-time buyers.
“Typically, there is a strong correlation between property transactions and home improvements,” Lucian Cook, head of residential research at Savills, said.
“[But] buyers… are increasingly favouring turn-key or ready-to-move homes,” he said, adding that sentiment “remains cautious” with ongoing uncertainty around the UK’s economic outlook.
While consumer confidence has been slowly recovering over the last few months, Brits have taken a generally negative view of their own and the country’s finances over the last few years.
“Many buyers are adopting a lower-risk approach and are less willing to take on the financial and logistical challenges of renovation or construction work,” Cook said.
Most significant decline in the South
Home improvements have dropped the most in more expensive areas as homeowners shy away from costly projects.
RSM has estimated the current construction skills gap at 250,000, pushing up the price for well-qualified tradespeople, while a raft of other supply-side costs are on the rise.
“The higher the house prices in an area, the more extending makes financial sense, meaning that more value can also be unlocked in London and the South compared with the Midlands and the North as build costs are less likely to outstrip the value added,” continues Lucian Cook.
“But even in these areas the viability of construction is reacting to shifting market dynamics, with higher interest rates and weaker sentiment. Rising material costs have further impacted the potential uplift across these properties, squeezing margins even in higher-value areas.”
The slowdown in home improvements projects is one of many factors contributing to trouble in the construction sector.
It is the hardest-hit area for insolvencies, accounting for 19.5 per cent of all UK company failure in February, a jump of around three percentage points compared to last year and the highest share in three years.