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