Build it up

Send not to know
For whom the bell tolls,
It tolls for thee

On the face of it it’s not looking like a good time to be a housebuilder…more specifically, a shareholder in a national housebuilding business that begins with a B. I’m old enough to remember the Barrett TV adverts with the chirpy chappie jumping in and out of his helicopter at various shiny new housing estates. I’m also old enough to remember when ‘Barrett-style houses’ was an insult thrown at purveyors of identikit boxes, all squished together on a site with precious little thought for differences in style, taste or local architectural vernacular.

Barrett, Britain’s biggest house builder, saw its pre-tax profits dive from £705m to £170m in the past year. Ouch.

The number of houses actually completed fell by nearly 20%, to 14,000, and the company is warning that this year there will be even fewer. Double Ouch.

Sale prices were also down, by 4%, and, to match the lower demand, the number of houses built each week was reduced by, again, 20% below the previous year’s average. Treble Ouch.

It’s not surprising that this is the case, since the The Office for National Statistics’ latest data shows a 2024 Q1 drop in house building starts of a third, compared to Q1 2023: 44,940 down to 29,820. Completions too, were down 17% on the previous year’s Q1. Quadruple Ouch.

Barrett were also hit by the continuing need to refurbish many of its properties in the wake of the Fire Risk Assessment of External Walls, post-Grenfell, and issues with the concrete frame designs on some of tis developments. Quintuple Ouch.

All is, however, not totally doom and gloom, although, as usual, it depends which economists you listen to at any moment in time. PWC have forecast that new build housing is set to grow 7% next year, and Barrett itself is quietly hopeful of recovery next year being more than just wishful thinking.

The promises by the new Labour Government obviously have a part to play in this optimism, with the much heralded changes to planning regulations,  a slightly better macro-outlook, and interest rates that are creeping ever-so-slightly downwards all likely to help. Possibly. If it all happens.

For many merchants, who deal rarely, if at all, with the larger housebuilders, this may all seem a tad esoteric. However, let’s not forget that a healthy housebuilding market is part of the symbiotic whole: housing transactions – of newbuilds and older properties – fuel more or less everything this industry deals with on a day-to-day basis somehow.