Housebuilders are forecasting growth and investment in the sector, despite uncertainty following the EU referendum.
The second annual Lloyds Bank Commercial Banking report on the UK housebuilding sector analyses the state of the industry today, and found confidence, despite challenges including the current planning system, a skills shortage and uncertainty following the Brexit vote in June.
Although over a third of firms (36 per cent) said that the uncertainty is the biggest challenge to their business, the industry is relatively optimistic; planning to grow, invest and create jobs.
The research found that optimism about the future of the housebuilding industry has picked up slightly from 7.1 last year to 7.2 in 2016, with 10 representing the highest level of expectation.
Housebuilders are also confident about growth, with 42 per cent of respondents saying that their growth forecasts had improved since the EU vote, compared with 27 per cent who said they had declined.
They are now predicting an average growth of 28 per cent over the next five years, up from 25 per cent last year.
Legal & General Housing Partnerships director Stephen Smith says: “This report from Lloyds provides an important contribution to the ongoing housing debate. On the whole, it shows that optimism within the housing industry remains strong despite wider market uncertainty. House builders remain positive about the growth potential in the sector, and the CML’s latest lending trends highlight that many buyers were able to move onto or up the property ladder this year, helped by low interest rates and government initiatives like the Help to Buy scheme.
“However, today’s report also highlights a growing skills gap in the industry which will undoubtedly contribute to the ongoing supply side deficit that has been plaguing the UK. Despite the government’s target of building 300,000 new homes in 2015, only half that number were realised. With house prices rising in part as a consequence of this shortfall, negatively impacting affordability, recent figures have revealed that next year property rentals are set to outstrip sales for the first time since the 1930s. The UK’s chronic housing shortage therefore remains a pressing and very real issue.
“During the Prime Minister’s first 100 days in office, we have been promised a ‘radical’ approach to housing, so there is at least a political recognition of the need to build more affordable homes. However, we now need to see these pledges turn to action. As we move closer towards the next Autumn Statement, we hope to see the government starting to work more closely with the house building industry to ensure this annual target is met, or even exceeded.”