So far, it’s been a testing year economically for many businesses, including housebuilders. We look at some of the latest completions figures to see how new build homes are performing in 2022. Find out more.
The figures from the NHBC
The latest figures from the NHBC look at the second quarter of this year (April to June 2022). The good news is that new home registrations have increased 45% in this quarter and the number of completions have returned to pre-pandemic levels.
More specifically, in Q2 2021 a total of 46,217 homes were registered to be built in the UK, and for the same period this year, the figure increased to 66,855. It is thought by the NHBC, that the surge in registrations can be contributed to a rush to get ahead of the regulation changes, in June. This is the time when the Building Regulations were changed to include new standards to reduce carbon emissions and energy use. This would have been done to minimise any cost impacts the new regulations might bring.
Healthy pre-pandemic completion numbers
For the second quarter of 2022, the number of new home completions totalled 40,289. The last time the industry saw the figure surpass the 40,000 mark was right back before the pandemic, in Q4 2019. It was then that 42,354 new homes were completed.
So far so good, and according to the CEO of the NHBC, Steve Wood, “At this stage we are not seeing evidence that the cost-of-living crisis or risks of recession are affecting consumer demand, whilst registration levels reinforce continued confidence within the sector.”
Across the country, eleven out of the twelve regions saw an increase in new home completions. Those regions which saw the most significant increases, include the North East. Here 1,781 homes were completed in Q2 2022 compared to 1,284 in Q2 2021. The East Midlands was another region seeing growth with 4,117 homes completed in Q2 2022 compared to 3,071 in Q2 2021. The only region to experience a decrease, and it was a very slight one at that, was Wales. Here, there were 1,183 homes completed in Q2 2021 compared to 1,189 in Q2 2021.
Barratt’s completions up but profits take a hit
Some of the country’s leading housebuilders have recently shared their annual results. Barratt Developments is one such business to do so. The housebuilder confirmed their number of completions have returned to 2019 pre-pandemic levels.
For the twelve months ending 30 June 2022, the number of completions achieved were 17,908. This can be compared to 2021, mid-pandemic when the completion figures were lower at 17,243. But most encouraging of all, this year’s completion figures are higher than before the pandemic and 2019 when completions stood at 17,856.
However, at the same time as completions increased, and despite record revenues, the housebuilder also confirmed a drop in pre-tax profits. These fell around 20% from £812.2m to £642.3m. The reason for this lies in the setting aside of cash to repair legacy properties.
Persimmon sees a drop in completions in the first half of the year
Back in August, housebuilder Persimmon reported their completions had dropped by 10% for the first half of the year. This was put down to complexities surrounding planning which meant new sites couldn’t be opened as promptly as they would have liked.
Looking at the figures more closely, for the six months to the 30 June 2002, Persimmon reported 6,652 new home completions. This figure is down from the 7,406 new home completions they reported in 2021, and significantly down on the 7,584 completions reported pre-pandemic in 2019. The housebuilder is confident that completions will pick up for the rest of the year, and that they will hit their original annual target of building 14,500 – 15,000 homes.
Challenges for housebuilders to work through
It will be interesting to see, over the next coming months, how other of the country’s biggest housebuilders are performing in this testing market. Not only do we all need to work through an economic crisis but for housebuilders, issues such as planning, the strong competition for new land, and the new changes to building regulations prove to be added tests for them to work through. This might well impact how new build homes perform overall in 2022.
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