Home Property Housing delivery drops for the first time since the pandemic

Housing delivery drops for the first time since the pandemic

30th Apr 24 10:31 am

The latest industry analysis by property development appraisal software, APRAO, has revealed that while the number of homes built across the UK last year remained marginally higher than the 20 year annual average, there was a -11.8% year on year drop following two previous years of positive growth – the first annual decline seen since the pandemic.

APRAO analysed fresh data from the Office for National Statistics*, released last week, providing the final Q4 part to the puzzle with respect to the number of permanent dwellings delivered in 2023. APRAO then analysed the volume of new homes built in 2023 and how it compared to the previous year, as well as historic delivery levels.

The figures show that 189,260 permanent dwellings were completed across the UK in 2023, marginally higher than the annual average of 188,290 seen over the last 20 years.

However, this total was -11.8% down on the previous year (2022), putting an end to two years of positive growth in housing delivery levels.

In fact, since 2016, it’s just the second year that there has been a year on year drop in new-build delivery.

In 2016, 171,810 new homes were delivered across the UK, with this total climbing steadily to a peak of 214,150 new homes in 2019. However, the complications of the pandemic in 2020 saw the number of new homes built fall to 173,584 annually.

Since then, the number of permanent dwellings completed had been climbing, returning to pre-pandemic levels in 2022 when 214,589 homes were built, before the year on year drop seen in 2023.

While all home nations have seen the volume of new homes delivered decline on an annual basis, this reduction has been most pronounced across both Wales and Northern Ireland, with year on year drops of -22.3% and -21.3% respectively.

As a result, the annual number of new homes delivered across both nations in 2023 sat below the 20 year annual average.

This decline has been less prominent across England (11.1%) and Scotland (-11.4%), although the level of new homes delivered has still fallen by more than 11% across both nations.

Despite this drop, both nations saw housing delivery remain ahead of the 20 year annual average in 2023.

CEO of APRAO, Daniel Norman, said, “There’s no doubt that higher interest rates, untamable inflation and a cooling housing market have had a notable impact on the delivery of new homes across the UK market.

In fact, the number of permanent dwellings delivered on an annual basis has fallen for the first time since the pandemic and for only the second time since 2016.

While this decline has been more pronounced across some parts of the UK compared to others, new home delivery is down across the board and this really highlights just how difficult the landscape has been, not just for homebuyers, but for the nation’s housebuilders.

The expectation is that while 2024 is set to be a more stable year, market conditions are predicted to remain subdued until interest rates do start to reduce. With this yet to happen, the likelihood is that we will see another year of muted housing delivery.”

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