Gareth Belsham: “Housebuilding is stuck in reverse.”
Commercial construction is surging ahead but housebuilding is stuck in reverse, PMI data released today has revealed.
Here at Bloom we’re working with several commercial property developers who are pressing the button on previously paused investment plans, as well as many landlords who are investing in repair and refurbishment to generate extra value from their existing buildings.
But as Bloom Director Gareth Belsham MRICS tells The Construction Index Ltd today, “Construction isn’t so much a two-speed as a two-direction industry. With levels of commercial construction roaring ahead, and rising at their fastest rate for two and a half years, housebuilding is stuck in reverse. In fact residential construction has contracted for two months in a row, and November’s decline was the fastest seen since summer.
“With residential developers still chafing at high interest rates – which make it more expensive for them to buy land and build homes – and patchy consumer demand, the government’s promise to get 1.5 million more homes built in England over the next five years is looking ever more pie in the sky.
“Official data shows that the value of new orders placed by private sector housebuilders in the third quarter of 2024 was down by a painful 34.4% compared to Q3 2023. With costs rising and demand falling, there’s now a real risk of stagflation in residential construction.
“By contrast, we’re seeing lots of commercial property developers pressing the button on previously paused investment plans, as well as an increase in the number of commercial property landlords investing in repair and refurbishment to generate extra value from their existing buildings.
“In many ways the momentum of the commercial property sector is dragging the wider construction industry in its wake. The headline figures still look good, but the scale of the imbalance between sectors is alarming and getting worse.”