New-build homes bounce back strongly after Covid impact

Covid-19 led to a steep fall in housebuilding but output has since recovered to pre-pandemic levels.

The number of new homes being built dropped by 23% in 2020 as the Covid-19 pandemic caused widespread delays.

Construction was finished on just 123,151 new properties last year, the lowest level since 2012 and down from 160,319 in 2019, according to NHBC, which provides warranties and insurance on between 70% and 80% of all new homes.

The steepest falls in building levels were recorded between April and June, when the first national lockdown halted work on construction sites.

But output had recovered to being close to pre-pandemic levels by the last three months of the year.

Steve Wood, chief executive of NHBC, said: “Last spring saw a sharp shock to the housing market, and it is heartening that by the close of 2020, productivity levels had moved very close to those seen in late 2019.”

He added that demand for new-build homes remained strong, and some of the larger housebuilders had forward-sold properties into the summer.

Why is this happening?

The housebuilding industry was hit hard by the first national lockdown, which led to work on construction sites being suspended.

But activity was able to resume over the summer following the introduction of Covid-secure working practices and it has not been impacted by subsequent lockdowns.

Despite these measures, the sharp fall in construction work April and June still led to a drop in the total number of homes built over 2020 as a whole.

Who does it affect?

The fall in the number of homes being built is disappointing for people across the UK hoping to buy a brand new property.

The steepest drops were recorded in Northern Ireland at 38%, and the south east and Scotland, where output levels slumped by 28%, while the East Midlands was most resilient with new-build levels dropping by only 11%.

NHBC said many cities saw sharper falls in the number of new homes being finished than their wider regions, with Manchester recording a 42% drop, compared with a 27% one across the whole of the north west. London and Glasgow were the only major cities to buck this trend.

Buyer appetite for new-build homes soared by 66% in the six weeks after the housing market reopened last year, according to our analysis.

What support is available to buy a new-build home?

The Help to Buy scheme enables people to buy a new-build home with just a 5% deposit, which the government tops up with a 20% equity loan that is interest-free for five years.

The government has extended the deadline for Help to Buy twice in response to building delays caused by the pandemic.

It had previously set a deadline of 28 February by which construction on properties being bought under the scheme must have been completed.

But it has since extended this until 31 March, or 31 May under certain circumstances, to ensure people do not lose out due to building delays.

The scheme is changing on 1 April, after which it will only be available to first-time buyers, and regional price gaps will be put on the value of homes that can be bought through it.

Top three takeaways

• The number of new homes being built slumped by 23% in 2020 as the Covid-19 pandemic caused widespread construction delays

• Just 123,151 new-build properties were finished during the year, the lowest level since 2012

• Output had recovered to being close to pre-pandemic levels by the last three months of the year

by Blackstones

UK house prices close to four-year high

Buyer appetite continues to gather pace, while sellers are reluctant to list their homes for sale, driving up house prices, according to our latest House Price Index.

UK house prices have reached an almost four-year high, with the average home now worth £223,700.

The pandemic is stifling the flow of homes coming onto the market, with would-be sellers pressing pause on listing their homes for sale.

But buyer appetite continues to gather pace, according to our latest House Price Index.

What’s happening to house prices?

UK house price growth has hit 4.3%, the highest since April 2017. Momentum is coming from northern regions, where property is more affordable.

At a country level, Wales has the highest growth rate, with house prices rising 5.4% year-on-year.

And at a city level, Liverpool’s house prices are climbing the most, up 6.3% on a year ago. That’s the fastest rate of house price growth in 15 years.

Manchester is hot on its heels, with house prices up 6% year-on-year.

All cities monitored by our House Price Index recorded house price growth apart from Aberdeen, where prices dropped by 2.4%.

Which regions are seeing decade-high house price growth?

House price growth has hit a 10-year high in the north east, north west and Yorkshire & Humber, driven by strong buyer appetite and affordable property.

In fact, growth in these regions is running at the highest rate since before the global financial crisis, with house prices rising between 3.8% and 5.4% a year.

House prices are climbing in southern regions too, but property is less affordable, acting as a drag on growth.

In London, house prices are 2.9% higher over the last year – but this pales in comparison with the 20% annual growth rate recorded in July 2014.

What’s the pool of homes for sale like?

Even though the housing market remains open for business, the third national lockdown appears to be putting off some would-be sellers from listing their properties for sale.

The flow of homes coming onto the market in the first weeks of the year was 12% down on the same time last year.

The one exception to this trend is London, where the supply of homes for sale is growing. Flats account for much of this increase, as owners look to move up the housing ladder in search of more space.

Falling rents and expectations of an increase in capital gains tax in 2021 could also be motivating investors to sell.

What about buyer appetite?

Despite the third national lockdown, demand for homes to buy was 13% higher in the three-odd weeks between Boxing Day and 17 January than the same time a year ago. And the number of new sales agreed was also 8% up on last year.

There’s traditionally a seasonal bounce in activity at this time of year. But the pandemic has added extra impetus this year.

With more time spent at home, many people are carrying out a once-in-a-lifetime re-evaluation of their homes and lifestyles.

Some buyers have been motivated by the stamp duty deadline too.

And rising house prices have also meant that people have more equity in their homes, adding further impetus to move.

What does this all mean for home movers?

The combination of a lack of new homes for sale, rising buyer appetite and more new sales being agreed means that the overall number of homes for sale is 6% down on this time last year.

Not only is this reducing the choice of homes on the market, it's intensifying competition among buyers, and keeping an upward pressure on house price growth.

What’s next for the housing market?

Despite a spike in the pandemic and a third national lockdown, the momentum that built up in the housing market in the second half of 2020 has rolled into the first weeks of this year.

Director of research & insight, explained: “The strength of the market in 2020 has eroded the available number of homes for sale and this will mean continued upward pressure on house prices in the short term.

“The most affordable parts of the UK are recording the highest rate of price growth for 10 years up to 5.4% a year. We still expect house price growth to slow towards 1% by the end of the year.

“The rush to beat the stamp duty deadline continues and sellers who agreed to buy a home in 2020 would reasonably expect to make the stamp duty saving.”

by Blackstones

Property rich list 2020: Britain’s most expensive streets revealed

Discover the top 10 priciest streets in London and outside the capital, from Kensington Palace Gardens to Montrose Gardens.

The 10 most expensive streets in Britain can all be found in London, with Kensington Palace Gardens crowned the priciest UK road for the 12th consecutive year.

Houses on the tree-lined avenue cost an average of £35.9m, according to our latest research on the most expensive streets in Britain.

Outside of the capital, the South-east of England dominates, with eight out of the top 10 priciest streets outside of London located in Surrey.

Gráinne Gilmore, Head of Research at Zoopla comments: “Our data shows where housing stock and prime locations converge to create some of the most expensive addresses in the UK. Clusters of expensive homes are not unusual as the cachet of an area starts to create an appeal of its own, which can factor into what a home is really worth.

“London dominates the country's prime property market, but it is being challenged by the South East in terms of the number of million-pound streets, reflecting the rise in demand and pricing seen in this market, as well as its housing stock mix and its geographical size.”

The 10 most expensive streets in London

Kensington Palace Gardens has been the most-expensive street for the past 12 years.

Houses on the gated street dotted with embassies, diplomatic residences and the homes of ultra high net worth individuals will set you back nearly £36m on average.

It is notably adjacent to Kensington Palace, where the Duke and Duchess of Cambridge have an apartment, and the street is home to steel tycoon Lakshmi Mittal and Chelsea football club owner Roman Abramovich.

Our research found that Courtenay Avenue in Highgate, north London was the second-most-expensive street for the second year running, with homes worth £18.6m on average.

There are three new additions to the top 10 this year, in a list that is dominated by addresses in the London Borough of Kensington and Chelsea.

Chelsea’s Mulberry Walk comes in eighth place and has an average asking price of £9.6m. While St Albans Grove in Kensington, appears in ninth place, and has an average property value of £9.5m.

South-east dominates outside London

Outside of the capital, Surrey takes the crown with eight out of the top 10 priciest streets.

Montrose Gardens, in Leatherhead, is home to the heftiest price tags, with average property values of over £6m.

In second place is Titlarks Hill in Ascot, Berkshire, with an average property value of £5.9m.

Streets in Virginia Water, Surrey - which became the UK’s first “million-pound town” several years ago - feature on the list, taking third place (Virginia Water, average £5.8m), fifth place (North Drive, average £5.24m) and seventh place (Woodlands Road East, average £5m).

Million-pound streets by region

Regional analysis of the data shows there are now 12,545 streets in the UK with an average property price of £1m - and increase of 30% since 2015.

Of these, 4,707 are found in the South-east of England and 4,523 are in London.

Only 27 can be found in Wales, 57 are in the North-east of England, and 114 in Scotland.

Priciest streets in the largest counties 

The most expensive streets in Britain’s largest counties (calculated by population) have also been revealed.

Montrose Gardens again tops this list, but in second place is Philippines Shaw in the Kent Downs with an average property price of £4.2m.

Dock Lane in Brockenhurst is Hampshire’s most expensive street, with an average property value of £2.4m, and is in third place.

Next on the list is Theydon Road in Epping, Essex - a sought after location due to its countryside feel and proximity to London, with an average property value of £2.4m.

In fifth place is The Avenue in Altrincham in Cheshire, with an average property value of £2.29m. It is Greater Manchester’s most expensive street and known to be popular among Premier League footballers.

by Blackstones