According to the latest figures from Federation of Master Builders’ (FMB), the consumer demand for new homes has fallen by 8% to its lowest level since 2013
The figures were taken from the House Builders’ Survey, the only annual assessment of small and medium SME housebuilders in England.
Small housebuilders report current buyer demand for new homes is at 2.9 (out of 5), down from 3.14 from last year. This is expected to fall further to 2.75 next year. Almost half of small housebuilders attribute this fall to a lack of consumer confidence.
Barriers to small housebuilders
According to the survey, the four main barriers to SME housebuilders include availability of land, planning departments, access to land and access to skills. These have all reportedly improved over the past year.
Access to land remains the top barrier with 43% of builders citing this as the top barrier, down from 59% in 2018.
The planning system remains the second major barrier with 42% of firms reported this as a barrier down from 51% in 2018. The main reason being ‘inadequate resourcing of planning departments’.
39% of small housebuilders say access to finance is a major barrier to their ability to build more new homes, the lowest percentage since the survey began eight years ago. However, reported concerns about the level of loan refusals are at their highest in three years.
Those reporting a shortage of skilled workers fell from 44% to 26%.
Brian Berry, chief executive of the FMB, said: “Small housebuilders 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. 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.”
Berry continued: “The main barriers facing small housebuilders have started to ease but they are still present. This is the fifth consecutive year that small housebuilders have cited lack of access to available and viable land as the number one barrier.
“The increases in planning fees by 20% in January 2018 were supposed to lead to increased speed and delivery of planning services, but only 3% of our members have seen any improvement since the rise. In fact, 38% of small builders have seen the performance of planning departments worsen.”