Housebuilding Hits a Slump, But Hope Looms

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Oh, the highs and lows of housebuilding!

According to the latest PMI data from S&P and CIPS, housebuilding has hit its lowest point since the financial crisis, with only the pandemic period being worse. The construction PMI for November took a nosedive to 39.4, with housebuilding plummeting to a mere 35. Ouch!

Kelly Boorman from RSM UK paints a picture of frustration, with builders feeling the squeeze and demand for new homes dwindling. The looming mansion tax in 2028 and an extra 2% property income tax are adding to the uncertainty, potentially making it trickier for young folks to climb onto the property ladder. It's a bit of a pickle, isn't it?

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But wait, there's a silver lining! The mansion tax might just encourage some property owners to downsize, sparking a flurry of activity in the lower end of the market. While house prices might stay flat until 2028, this downsizing trend could boost housebuilding volumes.

Thomas Pugh, RSM UK's chief economist, suggests that while the construction sector's output might not be as dire as the PMI figures suggest, the risk of flatlining in Q4 is real. However, with no major tax hikes on the horizon and interest rates easing, there's a glimmer of hope for the construction sector to bounce back.

So, property pros and business buffs, keep your spirits up! The road might be bumpy, but brighter days could be just around the corner.

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Want to hear more? Join Mal & Matt on the Property AI Report Podcast each week!

Access from your preferred podcast provider by clicking here

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