Housebuilding completions drop 12% in first quarter

Housebuilding completions for England have dropped by 12% in the first quarter of 2023, according to the latest official data.

The numbers from the Department for Levelling Up, Housing and Communities, show that housing completions between January and March fell to 39,970 on a seasonally adjusted basis, 12% below the level at the end of 2022, and 8% under the figure from the first quarter in 2022.

The figures, which show the impact of the current housing market downturn on build rates across the sector, also show a similar impact on housing starts. The figures, known officially as “indicators of new supply” because they don’t cover the entirety of the market, state that starts for the three months dropped by 3% quarter-on-quarter to 37,810, but were also 12% down year-on-year.

The drop off in completions is likely to have been exacerbated by a high fourth quarter number last year as housebuilders rushed to complete homes prior to the end of last calendar year in order to meet the original cut-off date for the Help to Buy scheme. The non-seasonally adjusted quarterly completions figure for Q4 2022 of 50,400 represented only the second time more than 50,000 homes had been built in a quarter in the last 35 years.

The national figures hid much bigger regional variations, with non-seasonally adjusted regional figures showing a 42% quarter-on-quarter drop in completions in London, albeit from an exceptional high, with a 31% drop reported in the East of England, and a 20% fall in the South east.

>> See also Fears grow over interest rate impact on new build

The supply figures are based on numbers supplied by building control data, and while they are not seen as reliable absolute totals, because they only cover around 80% of the market, they are viewed as reliable gauges of trends in the market.

The trends seen in the building control were also matched by EPC data, contained in the same release. In the last quarter there were 53,200 EPCs lodged, a 10% decrease compared to the same quarter last year.

The figures come amid fears of a deepening housing market slowdown precipitated by a renewed burst of tightening monetary conditions, with interest rates rising sharply, increasing the cost of buying a house with a mortgage. According to data service Moneyfacts, the average cost of a 2-year fixed rate residential mortgage rose to 6.37% today, up again from 6.3% yesterday, with the market still adjusting following the Bank of England’s decision to rate the base rate by 0.5 percentage points last week.

Last week research house Capital Economics forecast that house sales will drop 25% in the coming year given the mortgage price surge, while Berkeley Group last week said it expected sales to be 20% lower.

Developer Pocket last week said the changing environment was likely to cause housing starts to drop significantly in the capital.