The Home Builder’s Federation (HBF) has released their second quarterly SME Developer Sentiment Survey, showing that small- and medium-sized home builders have low market expectations
Construction SME confidence in land purchasing, housing starts, and market conditions have all been weakened since the last survey.
The survey tracks what issues SME housebuilders are experiencing and what barriers are preventing them from expanding.
Conflict in Iran affecting business outlook
99% of the SME home builders responding to the survey said that the war in Iran had affected their business outlook for the next 12 months more than they had anticipated, and more than 25% said that the war had led to them reconsidering their business or pausing the acquisition of new development sites.
This has also exposed the state of the operating environment for SMEs as viability, planning, and buyer confidence are all under strain, and have been for a long time. These issues lead to rising costs and weaker buyer demand, something most SMEs cannot afford at the moment.
49% of SME respondents said that they are expecting to reduce their land purchasing activity over the next three months, and just 18% expect to increase it. 94% said market conditions are causing caution when considering new site starts, when this number was 70% in the last survey. 48% said conditions are causing significant caution or delays to starts altogether, and 45% reported moderate caution.
Just 21% expect activity to increase.
The outlook has become bleak
75% of respondents say they currently hold a negative view of market conditions over the next three months, and a mere 4% say they have a positive outlook. In the previous survey, these numbers were 37% and 28%, respectively, marking a severe drop in confidence.
For the first time, development viability has overtaken planning delays as the biggest supply-side challenge SME home builders face, as 75% identified it as one of the top barriers to delivery, and planning delays are cited by 74%.
Neil Jefferson, chief executive at the Home Builders Federation, says: “The findings of the latest SME sentiment survey paint a very concerning picture. SME home builders are operating in an increasingly challenging market, whilst higher taxes and policy costs are making many sites unviable, reducing confidence and construction activity.
“This decline in confidence has significant implications for housing delivery and the sector’s ability to meet national housing targets. Addressing both longstanding barriers, such as planning delays, and emerging challenges, including rising costs driven by global instability and proposed tax changes, will be critical if SMEs are to invest confidently and help increase housing supply.
“While we welcome government reforms to the planning system, if we are to increase housing supply broader interventions are urgently required. With a change in Prime Ministerial leadership on the horizon, there is a clear opportunity to reverse these concerning trends and unlock the full potential of smaller builders to help deliver the homes the country needs.”
The post Construction SME confidence has taken a hit in Q2, says HBF appeared first on Planning, Building & Construction Today.
