David Thomas, chief executive of Barratt Developments, said planning delays will continue to impact home supply despite recent reforms. Photo: Barratt Developments < p>The UK's largest developer said it would take at least two years for the housing market to recover.
David Thomas, chief executive of Barratt Developments, said that the number of new buildings built in the UK will decrease by for at least the next two years as high borrowing costs are driving sales down.
Barratt warned it would build 3,000 fewer homes next year in response to falling demand and said it had stopped buying new land for construction.
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Mr. Thomas said: “The number of houses to be built in the near future will be significantly reduced. The increase in the number of homes will not happen before 2025, if not 2026.”
A bleak outlook emerged as data showed last month was the worst month for UK housing construction since the first lockdown due to the pandemic in May 2020.
S&P Global/CIPS UK Construction Purchasing Managers Index (PMI) residential construction remained the weakest part of the construction sector last month.
Julia Bellicoso of Capital Economics said: “High mortgage rates have made the cost of buying a home out of reach for many, fueling demand for housing. new builds will fall.”
Home sales will fall below the 50-year average
Ms Bellicoso said new home construction is likely to fall by a third in the last quarter of the year.
Y Thomas said: “We expect this background to continue to be difficult in the coming months.
“While there remains a clear need for more housing construction in the UK, short-term demand has been impacted by mortgage affordability problems.” causing mortgage rates to skyrocket.
Barratt is the latest major homebuilder to warn that this will happen. build fewer houses as demand dries up.
Rivals Persimmon and Taylor Wimpey have said they will have fewer completed projects next year than last year, while the Housing Federation (HBF) warned earlier this year that housing construction could fall to its lowest level since the Second World War. world war. war.
Government briefing papers say England needs to build around 340,000 new homes each year, but less than 120,000 could be built annually in the coming years, HBF warned.
The results, released Wednesday, show Barratt built 700 fewer homes in 12 months. to June 2023 than the previous year. The FTSE 100 Index stood at 17,206.
In addition to falling demand, home builders have been hit by nutrient neutrality regulations designed to limit the amount of harmful chemicals from new homes that enter rivers and harm wildlife.
Regulations required house builders to pay for river pollution reduction projects before houses could be built.
Leveling and Housing Minister Michael Gove recently cut red tape in an attempt to spur construction.
Mr Thomas welcomed the changes but said delays in local planning continued to hold back developments.
Mr Thomas said: «The removal of nutrient neutrality is good news for the country, especially since more than 70 authorities are not granting [planning] consent on this basis.
«Then we need the local authorities to actually grant [permission] for planning. Thus, the construction of houses associated with this will take from 18 months to two years. This will not result in homes reopening any time soon.”
Barratt's share price fell 1.9% in early trading on Wednesday after announcing a 16.2% fall in adjusted pre-tax profit to 884.3 million pounds.
The construction company, which employs more than 6,000 people, has reduced its headcount by 6%, or 400 people, since 2022.
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