黑洞社区

Housebuilders are remaining cautious about investing in new developments despite a much stronger than expected housing market over the summer, given concerns over the possible impact of the winding up of the government鈥檚 furlough scheme and a second wave of covid-19 infections.

Housebuilders told 黑洞社区鈥檚 sister title Housing Today they were still cautious about investing in new schemes despite a rapid recovery in the housing market since lockdown rules were eased in May.

A raft of economic data in recent weeks has shown a rebounding of confidence in the housing market despite the UK already entering a recession of unprecedented severity.

Chris Brown, chair of regeneration developer Igloo, said sales had been 鈥済oing gangbusters鈥� over the summer, which had injected vital cash and confidence into development businesses, allowing some work on pipeline projects to proceed.

But he said there was still a reluctance to invest in pipeline projects, in terms of both land and planning, that means there is a gap in the future pipeline.

Brown said: 鈥淪pending decision by us or our funders were initially stopped, and now they鈥檙e coming through 鈥� but it鈥檚 smaller schemes and investments, not the really big decisions.

鈥淭he reality is there are three huge downside risks 鈥� first the economic impact of the first covid lockdown, second the risk of a second wave and more lockdowns, and third is the risk of no deal or a bad deal Brexit, which would be particularly disrupting to the supply chain.鈥�

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His words were echoed by Larkfleet Group chief executive, John Anderson, who said sales had been 鈥減articularly strong鈥� compared to a typical summer, due to pent up demand and the government鈥檚 stamp duty holiday.

But he said there remained a number of threats to the market, such as Brexit and the lack of availability of high loan to value mortgages.

He said: 鈥淲e are being cautious about the future. Our caution, however, reflects the widespread expectation that unemployment will rise when the furlough scheme is scrapped in October, potentially undermining consumer confidence.

鈥淲e need the chancellor to rethink the potential cliff-face finish to the stamp duty holiday in March, by either tapering the benefit or softening it beyond that date in some way.

鈥淭he government鈥檚 plans to introduce a means-tested and capped version of Help to Buy 鈥� at the same time the stamp duty holiday ends 鈥� could cause serious harm to the market, and this also needs addressing.鈥�

This caution in the face of strong sales is reflected in Barratt鈥檚 annual results announced yesterday, which show that sales completions in the six weeks to August 23 were 62% above the saem period last year. 

Despite this, chairman John Allan said: 鈥淭he full extent of the economic impact being caused by covid-19 is yet to become fully clear, and there remains uncertainty regarding the outcome of the ongoing negotiations regarding the UK leaving the EU.鈥�

Marc Vlessing, chief executive of London-focused resi developer Pocket, behind the Pocket House, said he was optimistic for the market over the coming months, with only high-end developers at risk of seeing the current market bounce fizzle with the ending of chancellor Rishi Sunak鈥檚 stamp duty holiday next March.

He said: 鈥淲e鈥檙e seeing no lack of demand for our product 鈥� we鈥檝e just had one of our best months ever. It鈥檚 not just a post-covid bounce, it鈥檚 about the continuing level of unmet demand.

鈥淢y prediction is we鈥檙e going to see 12 strong months ahead, with good land buying opportunities and a reasonable contracting market.

鈥淔or higher end developers this may prove to be just a temporary bounce, but for those with a clear brand focused on the value end of the market, with strong design credentials it will be more long lasting.鈥�

Despite this optimism few housebuilders have given detail over how many new starts they are making, though many have made clear that they have prioritised delivering existing reserved homes since lockdown rules were eased.