Survive in ’25: get fixed in ’26?

To live is to suffer, to survive is to find some meaning in the suffering

In yesterday’s least surprising news, the worst performing sector of the construction industry, according to the S&P Construction PMI, is housebuilding. Output in this sector has fallen for the third month in a row, and the drop in December was the sharpest since last Summer.

No surprises there for anyone who’s been trying to sell building materials to that sector for the last six months.

It’s unlikely to change in the immediate future, given the challenging backdrop in terms of interest rates and consumer confidence. But as we get further details through around the government’s spending plans in the first half of this year there may well be a bit of a boost. The opportunity to for this particular sector to pick up is there, given the much-heralded planning reforms.

Deputy Prime Minister Angela Rayner has her sights set on parts of the green belt – I‘ve talked about this before – and, on paper, that all seems reasonable. Build on the grotty bits of the green belt and leave the nice bits alone to stay, well, green and pleasant. Except it’s the nice bits that are easier to deal with. If you’re a developer whose business model is for developments of 80+ houses, it’s a lot easier to buy three fields from a farmer wanting to downsize than trying to squeeze them into the site of the old bus depot in the centre of town. Developers want to build homes that they know they can sell. The people who want to buy a four-bedroomed townhouse where the bus depot used to be, five minutes’ walk from the train station, opposite Costa and a stone’s throw from Tesco and the secondary schools, are not usually the same people who want to buy the four-bedroomed executive home on the edge of the next village.

Then there’s the question – currently being brought up in my local council planning sessions – of how much infrastructure should be in place before developments are granted permission, and who’s job it is to put that in place. Section 106 payments from developers are all very well as long as they are a) actually spent and don’t end up being absorbed into council coffers, an b) spent in the relevant neighbourhood, and not in the town three miles away, just because that’s all part of the same council.

All that notwithstanding, there are reasons to be, probably not cheerful, but mildly hopeful, for this year.  There are definite plans for infrastructure spending, and while increasing labour costs, high interest rates and jittery consumer confidence will continue to have an impact on the housebuilding sector,  2025 is expected to be better than last year.

Let’s hope so. 2024 was the year of “survive until ‘25”, maybe now we’ll can hang onto the notion of – cheesy slogan alert – “survive in ’25, for a fix in ‘26” (works better if you say it out loud).

Still not sure how those extra 1.5 million more homes in England over the next five years are going to get built though.

Happy New Year.