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Consumer demand for new homes has dropped again, falling by 8% in a year, to its lowest level for five years, according to the Federation of Master Builders’ (FMB) House Builders’ Survey of its small and medium (SME) house builders in England.

The results do not come as a surprise, with small house builders reporting that current buyer demand fell from 2.9 (out of five), down from 3.14 last year, a figure that is expected to fall further to 2.75 next year as the market jitters remain surrounding Brexit and its affect on consumer confidence. In light of political and economic uncertainty many prospective homeowners are holding off on moving ahead with plans to buy for the first time, or move house.

Brian Berry, Chief Executive of the FMB, said: “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.

Berry continued: “The main barriers facing small house builders have started to ease but they are still present. This is the fifth consecutive year that small house builders have cited lack of access to available and viable land as the number one barrier. Small sites are the bread and butter of SME development, but unfortunately local authorities’ Local Plans are still far too focused on large sites.”

Berry concluded: “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. Builders are now paying more for an inferior service which needs to be addressed urgently as part of the Government’s proposals to accelerate the planning system.”

Key findings of the House Builder’s Survey

Overall, the report found the following:

  • Small house builders report current buyer demand (out of 5) at 2.9, down from 3.14 last year, and this is expected to fall further to 2.75 next year;
  • Almost half (48%) of small house builders attribute the fall in buyer demand to a lack of consumer confidence;
  • The four main barriers to SME house builders (availability of land, planning departments, access to land and access to skills) all improved over the past year;
  • Access to land remains the top barrier with almost half (43%) of builders citing this as the top barrier, down from 59% in 2018;
  • The planning system remains the second major barrier to small house builders, with 42% of firms reported this as a barrier down from 51% in 2018. The main reason being the ‘inadequate resourcing of planning departments’;
  • More than one third of small house builders (39%) 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; and
  • Those reporting a shortage of skilled workers fell from almost half (44%) to one quarter (26%).

Download the full survey

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