The number of new homes built dropped substantially in the first quarter of 2024 as the sector struggled with the impact of high interest rates and poor weather, new data shows.
Figures released by the National House Building Council (NHBC) show that 26,240 new homes were completed in the first quarter of the year, down 13 per cent on a year ago.
New home registrations fared worse, falling 20 per cent in the year to 21,967.
“Our Q1 2024 figures reflect prevailing market conditions,” Steve Wood, chief executive of the NHBC said.
“Rises in the Bank of England’s base rate have driven mortgage rates higher, leading to a drop in new home purchases and a slowdown in house price growth,” he continued.
“Prolonged wet weather has also hampered house building output in Q1, with the south of England experiencing its wettest February since 1836, according to the Met Office, and many parts of southern England recording well over twice the average rainfall,” Wood added.
Source: NHBC
The housing market has suffered from the Bank of England’s interest rate hikes over the past three years. The benchmark Bank Rate reached a post-financial crisis high of 5.25 per cent last August, which pushed up mortgage rates and quashed demand.
However, the prospect of imminent interest rate cuts suggest the housing market’s outlook could improve as the year progresses.
Although new home registrations fell in the quarter as a whole, the number of registrations increased month-on-month in each month in the quarter. Total registrations in the quarter were also higher than the past two quarters.
The latest figures from the Bank of England showed mortgage approvals reached their highest level since September 2022 last month.
“Build volumes are anticipated to rise in the second half of the year as economic conditions begin to improve and consumer confidence starts to recover,” Wood said.
The slump in housebuilding comes amid a national housing crisis. The average UK home is now worth 8.3 times the average annual salary, up from 4.5 in 2002.
A failure to construct new homes is widely seen as the primary cause. Between 1970 and 2023, construction of new houses has fallen by 46 per cent, according to Britain in a Changing Europe.