Fears over homes target as blue-chip builders fall short

The number of new homes completed by stock-market listed housebuilders is set to fall below 70,000 this year in a blow to the Government’s targets.

The ten companies listed on the London Stock Exchange – which include Barratt Developments, Persimmon and Berkeley Group – will build around 69,300 houses and flats between them in 2024, according to forecasts from Peel Hunt.

This is slightly less than the 71,000 the broker estimates were finished in 2023 – and a far cry from the 85,000 completed in 2022.

It puts in jeopardy the Government’s goal to build 300,000 homes a year by the mid-2020s to tackle the housing shortage.

In recent years the average has been just under 235,000. This includes all housebuilders, not just those listed on the stock market. Peel Hunt calculated the numbers on a calendar year basis.

Forecast: The ten companies listed on the London Stock Exchange will build around 69,300 houses and flats between them in 2024

The property sector has struggled since Liz Truss and Kwasi Kwarteng’s mini-Budget in September 2022, which caused Government borrowing costs to soar and in turn pushed mortgage rates higher, though these have since fallen.

Companies also say they are struggling with the withdrawal of the Government’s Help to Buy scheme and planning red tape.

Potential buyers have held back from moving house due to the cost-of-living crisis and widespread predictions that house prices will fall, leading some to wait in case the market becomes more affordable.

Earlier this month, Halifax estimated the average house is worth £287,105. Prices rose for the third consecutive month in December due to a shortage of properties on the market but overall they are expected to fall this year.

The other housebuilders in Peel Hunt’s analysis were: Crest Nicholson, Bellway, MJ Gleeson, Redrow, Springfield, Vistry and Taylor Wimpey. The number of homes expected to be completed in 2024 are even fewer than in 2020. That year, the ten firms completed 69,500 despite building sites being closed for several months during lockdowns.

Stewart Baseley, executive chairman at the Home Builders Federation said: ‘We have been warning for some time that if Government didn’t change its approach to housing policy, we would see sharp falls in supply and all indicators are now confirming this.

‘Recent years have seen the policy environment become increasingly anti-development and the implications are now becoming clear.

‘Falling housing supply, amidst an already acute housing crisis, has huge social and economic implications and should cause politicians to seriously consider their approach.’