Demand for homes in England is now at its lowest levels since 2015 when records began, according to the latest House Builders’ Survey from the Federation of Master Builders.
The survey, which keeps track of the experience of micro, small and medium-sized house builders in England shows that in 2023:
- The planning system is rated as the top major barrier holding back the delivery of new homes at 55%.
- Restricted mortgage availability becomes the second largest barrier with 51% of members picking this option, which is a steep rise over the last two years.
- Lack of available land is the third biggest barrier at 48%.
- Material costs are the fourth biggest barrier with 43% of members choosing this option, but members indicated this will fall to 23% over the next three years.
- The fifth most significant barrier holding back housing delivery is the lack of finance to the company at 42%.
- Buyer demand is at its lowest level since 2015 (when the survey began recording this data), with an average score of 1.99 (rated out of 5, with 5 being very good and 0 being very poor).
Chief Executive Brian Berry said: “This year’s FMB House Builders’ Survey shows that the housing market for smaller house builders, is in an increasingly difficult place, with perceived buyer demand hitting the lowest levels since our records began in 2015. There are signs this will pick back up again, but the already beleaguered SME housing sector, which delivers a fraction of the market share it once did, at around 10% compared to 40%, just over 30 years ago, looks like it will limp into next year.
“The planning system tops the list of major barriers stopping small builders from delivering new homes. While the impending rise in planning fees may help in the short term to prop up struggling planning teams, there are fundamental issues at play. For small builders the survey is clear that the system is too complex and costly. Communication from local planning authorities is also poor. Without changing this, planning issues are likely to loom large as a barrier for some time. Lack of available land is also frustrating small builders and without proper incentives for local authorities to promote small sites it seems unlikely there will be much change.”
He concluded: “The economic landscape is also affecting small builders. Restricted access to mortgages has become the second biggest barrier. This issue has seen a rapid rise over the last two years, reflecting the devastating impact the wider economy can have on the small house builders. With many consumers choosing not to take out mortgages it would appear the market is only getting smaller, resulting in less homes being built.”