Price stag­na­tion leads to col­lapse of 343 house­builders

Yorkshire Post - - BUSINESS -

MORE house­builders went out of busi­ness in the last 12 months than at any point since 2015, new data has re­vealed.

In the year to Septem­ber, 343 com­pa­nies in the sec­tor shut their doors, as house prices stag­nate in Lon­don and the South­East and ma­te­rial and labour costs rise.

The num­ber of com­pa­nies clos­ing down has in­creased ev­ery year since 205 shut in 2015.

A drop in the value of the pound has helped push up the price of im­ports, while East­ern Euro­pean work­ers have left in the wake of the Brexit ref­er­en­dum, lead­ing to in­creased wages, ac­cord­ing to Paul Pittman, a part­ner at Price Bai­ley, which compiled the data.

“Sub­dued ac­tiv­ity in Lon­don and the South-East, and fall­ing prices as peo­ple de­fer pur­chases due to Brexit un­cer­tainty, have all taken their toll on the smaller house­builders,” he said.

In Au­gust, cash-flow prob­lems forced New­court Res­i­den­tial, a com­pany fo­cused on high-end de­vel­op­ments in Lon­don and the South-East, to shut down.

“The pro­por­tion of new houses built by small house­builders is dwin­dling and yet there is huge op­por­tu­nity to build homes on the small parcels of land which the big de­vel­op­ers won’t touch,” Mr Pittman said.

He added that, while these pres­sures are squeez­ing the smaller play­ers in the sec­tor, larger de­vel­op­ers have weath­ered the storm bet­ter.

“The listed house­builders have per­formed well over the last few years, but the suc­cess of the large house­builders has masked prob­lems in the wider house­build­ing sec­tor,” he said. “While the num­ber of new houses be­ing built is at an 11year high and profit mar­gins have dou­bled over the same pe­riod, SME house­builders have strug­gled.”

How­ever, the pic­ture for the listed play­ers is not en­tirely rosy.

As re­cently as Fri­day, Berke­ley Group an­nounced it had taken a 31 per cent hit to profit be­fore tax in the first six months of the fi­nan­cial year.

Many po­ten­tial house buy­ers are hold­ing off on spend­ing, as they await the out­come of the Gen­eral Elec­tion.

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