Private sector starts drop 49% in first quarter of the year

The number of new homes registered with the National House Building Council in the UK in the first quarter 2023 was 40% down on the figures from the same period in 2022, with private sector starts 49% down.

A total of 27,673 new homes were registered in the first three months of this year, with 17,953 of those being in the private sector and 9,720 affordable and built-to-rent properties. Registration of homes with the NHBC effectively correlates with start of construction on site.

The private sector homes’ figure was 49% down on the figure from the first quarter of last year, with a corresponding 11% drop for the rental sector. The National Housing Building Council (NHBC) said it understood some developments that were initially going to be for private sale had been block sold to housing associations and other providers.

Steve Wood, chief executive of NHBC, said: “Emerging from the pandemic we saw record numbers of registrations for detached homes but now with pressures on family finances it is no surprise that the present focus has shifted towards affordable homes in both the private and rental sectors.”

First quarter completions also decreased year-on-year, according to the figures from the insurance and warranty company, by 7% to 29,953.

However, the number of new homes registered with the NHBC in the 12 months to March 2023 was up 7% to 172,579, reflecting the high starts last year. This is the highest level of new home registrations since 2008.

The warranty firm suggested there were also signs of a potential return of confidence in the housing market in quarter one, with registrations recovering in March. There were 11,928 new home registrations in March compared to 8,005 in January and 7,740 in February, the NHBC said.

Wood added that the “new homes market is holding up well” and this was “despite a slow start to the year”.  “There is a growing sense of confidence that more normal conditions are starting to return as the year develops,” he explained. 

Although, he added: “Emerging from the economic shocks of 2022 and getting to grips with a demanding regulatory environment, the data indicates house builders are taking stock, planning their output carefully and matching it to expected demand.

“Buying a home is the biggest financial commitment many of us will ever make, so it is no surprise that prospective buyers are waiting to see if interest rates will fall in the coming months before making purchase decisions.” 

The housing market was hit by the mini-budget in September last year and since interest rates have risen, pushing up mortgage rates. Mortgage rates went up to the highest rate for 14 years in October last year.

NHBC warranties cover about 70 to 80% of all new homes built in the UK.