Housing Watch: the end of the year goes against the trend


As we progress rapidly in the fourth quarter (Q4) of 2021, demand in the new housing sector remains very strong.

Trade statements from home builders and other market commentary indicate that consumer appetite for buying – especially new homes – is unusually high for this time of year.

As fall turns into winter, large PLC homebuilders typically focus on completions, ensuring buyers move into their new home before the year is out, simultaneously increasing cash flow for the year. future.

But there is still very healthy demand from new buyers, largely thanks to a number of unique trends that have evolved under the influence of Covid-19.

Forward sale

A significant number of large homebuilders are also reporting very healthy forward selling figures, with many indicating their forward selling position takes them to the end of the second quarter of 2022 – further evidence of continued market demand prevailing.

From a builder’s perspective, there are still challenges with the supply and demand for key materials, but these issues are improving, slowly but steadily, over time. However, this does impact the overall build experience, extending the entire process by around four to six weeks.

A significant number of owners have never experienced an environment of higher interest

Other ongoing challenges include difficult access to trades and skills within the sector, but the outlook is considerably better compared directly to the second quarter of 2021.

Lender’s interest

Likewise, we have seen continued interest from lenders in the new construction industry, alongside an encouraging increase in the availability of higher loan-to-value (LTV) mortgages. But there is still some way to go and we would like to see more lenders increase the LTV curve in the coming months, especially for new properties.

Historically, there has been a lack of high LTV products for new properties. As the government’s purchasing aid program draws to a close in England – the initiative due to end in April 2023, and bearing in mind the current builders’ forward selling position – the impact of this change should be felt from the middle of the next year.

It is important to note the role of industry in environmental responsibility

But it’s encouraging to see the homebuilding industry working closely with private companies, such as Generation Home, Deposit Unlocked, and Market Mortgage, to launch initiatives designed to provide alternative avenues for buyers with low deposits. or limited income to access homeownership.

Rate hike

In recent days – and perhaps more particularly among professionals in the industry – there has been a lot of noise surrounding the impending Bank of England base rate hike, which will have the biggest impact on homeowners who come to the end of the fixed term rate. Agreements. We are anticipating the increase sooner than expected.

Home builders work closely with private companies, such as Generation Home and Deposit Unlocked

A whole generation of buyers are used to low interest rates, and while any increase is small from all-time highs, a significant number of homeowners have never experienced a higher interest environment.

In addition, in a very current way and in line with the recent Cop26 conference, it is important to note the role of industry in environmental responsibility: not only for new properties, but to prove technologies that can be modernized. in existing homes.

Mobeen Akram is National Account Manager for New Homes at the Mortgage Advisory Bureau

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