Construction Products Association

📌 Hanna Clarke (Construction Products Association) delivers her insight on the importance of competence when it comes to construction products - a guide to the different CPC Core Levels, how to ensure the communication of technical product information is delivered across all levels, and more. #passivefireprotection #construction

UK brick deliveries are a useful proxy for house building starts in the absence of monthly starts data. Brick deliveries in July 2024 were 19.0% higher than in June and 9.6% higher than a year ago (Upper Chart), according to the Department for Business and Trade. After 2 monthly falls, a rise in deliveries and starts in July 2024 was expected as housing market sentiment and demand picked up following slight falls in mortgage rates since Spring and with post-election certainty. It is worth noting that house building dropped off sharply in 2023 H2, so the annual percentage changes in 2024 H2 will look very positive, especially in the final quarter of this year. However, deliveries in July were still 11.0% lower than in January 2020 and 17.0% lower than the average between 2018 and 2019, which was before the recent distortions to the housing market and house building. Monthly deliveries and starts are volatile, particularly compared with house building completions, but they highlight that the housing nadir was in 2023 Q4 and 2024 Q1, and it has been recovering from a low base since then. However, year-to-date (January-July) deliveries in 2024 were still 6.4% lower than in 2023 and 32.4% lower than at the recent peak of housing optimism in 2022, before the sharp rise in mortgage rates and the consequent fall in housing market demand. Given the nadir of housing market demand and house building starts was in 2023 Q4 & 2024 Q1, the year-to-date percentage change in 2024 is likely to continue to gradually improve towards the end of 2024 and into 2025, assuming mortgage rates fall slightly further and housing market sentiment and demand rise. A greater concern long-term is where demand will come from for even 2021/22 house building levels (never mind 1.5 million homes in 5 years) if the reliance is solely on private house building, given mortgage rates will not fall back to the historic lows they were at as recently as 2021 and there currently isn't government support to enable private demand such as Help to Buy. So, house price affordability may remain a long-term issue as price falls in the downturn were limited by a strong labour market and very few forced sellers and further rates of price growth may be limited. However, the Chancellor’s Autumn Budget in October may see a change in direct public investment in house building (additional finance or finance brought forward for social and/or so-called ‘affordable’ housing) and government policy stimulus for private housing demand, especially for first-time buyers. #ukhousing #housing #ukhousingmarket #housingmarket #ukrealestate #realestate #ukconstruction #ukbuilders #construction #builders #constructionuk #buildersuk #building #ukbuilding #buildinguk #constructionindustry #contractors #supplychain #constructionworkers #constructionworker #constructionwork #contractors #housebuilding #buildingcontractors #growth #propertyprices #property #housing #housingmarket #housebuilding #housebuilders

UK brick deliveries are a useful proxy for house building starts in the absence of monthly starts data. Brick deliveries in June 2024 fell 1.1% compared with May and were 19.1% lower than a year ago, according to the Department for Business and Trade (Upper Chart). The decline in deliveries and starts in June 2024 was the second consecutive monthly fall and was expected as housing market demand slowed after Easter due to the uptick in mortgage rates in Spring. Plus, uncertainty due to the General Election being earlier than expected didn't affect activity down on the ground, but it may have affected consumer demand and led firms to adopt a 'wait and see' approach to new starts and focus on work in progress. So, post-election and with a significant majority so less uncertainty, there is likely to have been an uptick in deliveries and starts in July. UK Brick deliveries in June 2024 were also 30.3% lower than the average between 2018 and 2019, before the pandemic 'race for space' and Stamp Duty holiday, although it was also before the sharp rise in mortgage rates and with Help to Buy still in place.   Year-to-date (January-June) brick deliveries in 2024 were still 9.2% lower than in 2023 and 34.9% lower than at the recent peak in 2022 (Lower Chart), which was before the impact of sharp rises in mortgage rates and the resulting fall in housing market sentiment and demand. Given that the nadir of housing market demand and starts was at the end of last year and with the start of this year suffering from the poor run rate from 2023 Q4 and bad weather, even as demand rises in 2024 H2, starts overall this year are still likely to remain significantly lower than last year, especially given that house building in 2023 Q1 was still strong due to house builders meeting pre-sales made before the sharp mortgage rate rises. Looking forward, the Bank of England started to cut interest rates in August with an expectation of more cuts to come, but the initial direct effect of this on housing demand is likely to be limited given that fixed-rate mortgage rates already have interest rate cuts factored in. However, there may be a positive effect on sentiment and demand from the signalling aspect of interest rate cuts and slight falls in mortgage rates. Sustained real wage growth, now that inflation has slowed, and broader economic growth should boost housing market and house building demand from a low base towards the end of this year and gradually accelerate next year. #ukhousing #housing #ukhousingmarket #housingmarket #ukrealestate #realestate #ukconstruction #ukbuilders #construction #builders #constructionuk #buildersuk #building #ukbuilding #buildinguk #ukeconomy #constructionindustry #contractors #supplychain #constructionworkers #constructionworker #constructionwork #contractors #housebuilding #inflation #prices #buildingcontractors #growth #propertyprices #property #housing #housingmarket #housebuilding #housebuilders