House Builders Mood Brightens After Prices Tick Up

Posted by Glenigan on 24th April 2023 -

A rare piece of good news for house builders emerged in the latest Halifax index showing house prices rose fractionally in March (up by 0.8% compared to February) helped by an upturn in transactions and the first increase in mortgage approvals for six months.

Whilst the Halifax still expects an overall slowing in the housing market this year, the resilience reflected in the March figures provides some reassurance for private housing construction activity over 2023.

In particular, the large private volume house builders will find it easier to maintain sales – and hence construction activity – in the absence of the marked falls in house prices and poor market sentiment which were widespread after interest rates rose at the end of last year.

Improving customer demand

Indeed, the mood amongst the larger quoted volume house builders has brightened so far this year, helped partly by more sales of affordable units.

Bellway recently noted that it had seen customer demand improve since January. If its current reservation rates are sustained through the Spring, the company’s build programme is on track to deliver 11,000 homes in its current financial year (ending in July). This is only around 200 below the 11,198 which it built in the previous year.

Bellway has seen weaker private demand partly offset by a move to accelerate the construction of social homes. Although its rate of private reservations in the first half (ending in January) fell to 138 per week from 202 per week a year earlier, the firm’s level of construction completions in the period was virtually unchanged at 5,695 homes.

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