Industry Insights

Industry insights: pandemic strengthens the foundations of UK homebuilding

  • Public Equity
  • Consumer
  • Europe

When the COVID-19 pandemic first hit, few predicted that the housing sector would be such a major beneficiary. However, the need to stay-at-home for months on end caused whole populations to reevaluate whether their homes offered them what they needed, and what was important to them. Third Bridge Forum Interviews with a former manager director at Taylor Wimpey and former senior manager at Bellway gathered insights on the trends they have seen during a chaotic two years for the housing sector.

The stamp duty holiday “caught Bellway and its competitors napping”, the former Bellway manager said. “They weren’t expecting that move and I think they also weren’t expecting the demand that suddenly, I think exploded would be a good word, into the market, the demand for properties.” 

This surge in demand has sent prices soaring. Until June 2021, prices were inflated by up to 13% and although this tailed off to just over 10% through October, demand for properties is drastically outstripping supply across the industry. Indeed, “we’re still seeing gazumping going on, multiple viewings and final bids, closed bids, crazy things that were happening in 2005-2006”, the specialist said. 

A slowdown was forecast when the stamp duty holiday ended in September, but in reality there was no sign of any real cooling. “The second-hand market, partly… because of lack of stock, is, in the right locations, absolutely flying,” the expert added. Experts are surprised by the continued growth in sales prices, although, as they noted, there are stark regional variances. The industry as a whole logged 10% growth through end-November 2021, but only 5.1% in London compared with 12.9% in the southwest. Price growth strongly correlates with the house price to earnings ratio, which we were told is an important number to monitor. 

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