The New Build house market is an easy choice for first time property investors. Property developers are an important component of any property investment company, but the Coronavirus pandemic has severely impacted them.
Because the epidemic is expected to have a long-term impact on the New Build property market, property investors and others engaged in the industry must adapt to these changes to ensure continued success. Because of the epidemic, UK homebuilders have already missed crucial objectives, putting them in a frantic scramble to catch up in 2021.
The new-build market has dropped to its lowest level in a decade:
According to recent figures, the new-build industry’s proportion of UK property sales has plummeted to its lowest level in a decade. The Warwick Estates research comes at a time when the introduction of the EWS1 form has created a backlog for new-build homeowners. The agency examined Gov.UK – UK House Price Index data on new-build sales levels as a percentage of all houses sold between 2010 and 2020.
The market share of new construction is declining:
According to the data, new-build homes accounted for 9.6 percent of all sales in 2010. Despite a 0.2 percent drop from 2013 to 2014, new-build market share grew gradually and continuously to a peak of 13 percent in 2019.
However, by 2020, the sector’s market share had fallen to 8.8 percent of total sales. This 4.1 percent yearly decline is not only the largest in 10 years, but it has also reduced the new-build sector’s market share to its lowest point in a decade.
Except for Northern Ireland, the share of property transactions attributed to the new-build sector decreased in all regions of the UK in 2020, with the North East leading the way (6.3 percent), East of England (5.2 percent), and North West (5 percent) experiencing the greatest year on year decrease.
What is the root cause?
The problems caused by the Covid-19 pandemic undoubtedly played a role in this decline. While it was unable to dampen spirits in the housing market, it did impede construction efforts and force developers and investors to pause just long enough to postpone projects scheduled to be completed during the pandemic year.
The second cause was the adoption of the Cladding External Wall System (EWS) certified by the government in 2019. Following the Grenfell Tower catastrophe in 2017, the EWS certificate was created to guarantee that high-rise buildings’ exterior cladding is safe in the event of a fire.
However, the widespread view is that its execution was botched, and that developers and buyers had to wait months, if not longer, to have their homes inspected and authorised by a tiny number of experienced inspectors.
Homes cannot be acquired without certification, and many purchasers who had agreed on mortgages in principle have been unable to complete their purchases until certification was given.
As a result, while demand for new-build houses remains strong, the number of sales has dropped significantly. According to Bethan Griffiths, chief operating officer of Warwick Estates, “a significant amount of buyer demand prompted by the stamp duty holiday has helped revive buyer demand.” “However, such unprecedented levels of market activity have stretched resources, resulting in considerable delays throughout the back end of the transaction process.”
“The necessity for an EWS form, which has been exceedingly difficult to get, with delays of 6 months or even more in the worst cases, has exacerbated the difficulties for the new-build sector.”
“Despite efforts to address the issue by lifting the constraint on the construction of 18 metres or less, we have yet to see much improvement, and the issue remains a cause of concern for industry stakeholders,” he adds.
Future Success Requires Efficiency:
As the construction market slows in 2020 due to lockouts, labour shortages, and other difficulties, the New Build industry will need to recoup quickly. Property developers will aim to create as many new houses as possible, and vaccination distribution will assist in reopening the UK.
As previously indicated, the UK housing market has already missed its new house construction targets, and additional delays are likely until the country reopens completely.
As a result, New Build developers will aim to be as efficient as possible to complete their projects on schedule. That means they’ll be looking for cost-effective solutions to finish their projects to the highest possible standard.