Over 60% of UK housebuilders report ongoing supply chain pressures
Ongoing supply chain issues and delays in the planning system are limiting the delivery of completed new homes in the market.
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In our latest Knight Frank survey of over 50 of England’s leading volume and SME housebuilders, 61% of respondents said that supply chain issues and rising material costs were the biggest challenges adding pressure to their bottom line.
In many cases, UK housebuilders are managing the rise in build costs due to house price inflation in sought after areas. Our third quarter survey reflects this, with over half of respondents saying the current rate of house price inflation is helping offset build cost increases.
Development land with viable permissions is also in short supply. Knight Frank agents report that potential developments sites are getting held up in planning over environmental impact requirements. Delays are also being exacerbated in some cases where local authorities are under-resourced and/or holding out for policy compliant affordable housing.
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.”
Since around September, housing output has dipped below pre-pandemic levels, as this graph (below) shows. The data indicates the number of Energy Performance Certificates (EPCs) granted to new-build properties. Data is released weekly, making them a lead indicator for MHCLG’s annual net additions data.
While output had recovered to pre-Covid levels earlier this year, in recent weeks delivery has slowed again. Over the past two months, from the start of September to the end of October, output has been 11% lower than the same period in 2019.
