Housing starts fell sharply in last quarter of 2022

Housing starts fell by nearly a tenth in the last quarter of last year in the wake of the turmoil caused by Kwasi Kwarteng’s disastrous mini budget, official figures show.

Statistics based on building control data published by the Department for Levelling Up, Housing and Communities said that construction was started on 39,220 homes in the fourth quarter of 2022, a 9% drop on the previous quarter.

The seasonally adjusted starts figure is also an 8% drop on the number recorded the previous year. The data reflects a period when mortgage costs suddenly sky-rocketed in the wake of financial turmoil sparked by the September mini-Budget, with the average cost of fixed-rate mortgages peaking at over 6%.

However, the statistics also showed that completions continued to rise in the period, as housebuilders looked to ensure transactions backed by mortgages agreed prior to the mini-budget were completed. The figures recorded 46,080 completions, seasonally adjusted, 7% up on the previous quarter and 10% above the same period in 2021.

The government describes these numbers, based upon figures from Local Authority Building Control, the NHBC and other approved inspectors, as “indicators of housing supply” because it accepts they are not comprehensive, estimating the figures cover around 80% of the market. However, they are seen as a good indicator of trends.

The numbers come amid dire predictions of a significant drop in housing output this year, with some volume builders, such as Persimmon, expecting a major drop off in output. The Construction Products Association has said it expects housebuilding output to drop 11% this year, with starts down 11%, while the Office of Budget Responsibility has said the number of property transactions – historically closely linked to build rates – will fall by 20%.