Consumer demand for new homes falls by 8%, FMB finds

Demand for new properties in England has fallen to its lowest level since 2013, an assessment by the Federation of Master Builders (FMB) has found.

The federation’s latest House Builders’ Survey – the only annual analysis of small and medium sized (SME) house building firms – showed that consumer demand for new homes had fallen by 8% over the past year.

The report found that SME builders rated current buyer demand at 2.9 out of 5, compared to 3.14 in 2018. Almost half of the firms (48%) attributed this fall in buyer demand to a lack of consumer confidence.

But the survey also revealed that the four main barriers to SME house builders – access to land, planning departments, availability of land and access to skills – had all improved over the past year.

Some 43% of construction firms cited access to land as their top barrier, compared to 51% in 2018. The planning system remained an issue for 42% of respondents, down from 51% last year, while 26% reported a shortage of skilled workers, compared to 44% previously.

Access to finance was listed as a major hurdle by 39% of building businesses – the lowest percentage since the survey began eight years ago. However, concern about the level of loan refusals was at its highest in three years.

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

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