It is fair to say that 2023 will not be remembered as a vintage year by housebuilders.
As our analysis reveals today sales by the big quoted volume players look set to crash by as much as 27%. The latest in a series of profit warnings was issued only this morning by Vistry, which slashed £40 million off its guidance to the City and said the usual autumnal seasonal bounce in demand did not materialise.
The root causes of this slump in housebuilding are well known. The explosion in gilt yields just over a year ago after the mini-Budget added rocket fuel to a rise in mortgage rates that was already well under way. It also had a devastating psychological impact on the confidence of buyers, particularly first timers. The withdrawal of the Help to Buy lifeline at around the same time was another key setback.
Whilst this is clearly a major blow for housebuilders and their shareholders, it has far wider implications for home ownership and house prices. Such an abrupt slowdown in supply only makes it harder for young buyers to clamber on the ladder. So far the slowdown in the market has been mainly seen in far lower levels of activity, rather than a big fall in prices. So it is little surprise that the first hints of a package of measures to help home buyers, either in the Autumn Statement next month or the Budget in the spring were being floated in the Sunday papers this weekend.
Proposals being looked at apparently include an extension of the mortgage guarantee scheme, and reforms of the Lifetime ISA, though a return of Help to Buy does not seem to be on the agenda. The state of the public finances means that anything more than such relatively modest small scale tinkering is not an option. It seems unlikely that Jeremy Hunt’s proposals will significantly move the dial, either for housebuilders’ prospects, or the Conservatives’ electoral chances, in 2024.
