A prominent new build expert has given his verdict on that sector’s investment potential for the rest of 2023.

Mobeen Akram – National New Homes Account Director at the Mortgage Advice Bureau – says the new build sector has been feeling the crunch so far this year.

Data from the Department of Levelling Up, Housing and Communities shows that between April and June this year just 8,000 residential projects won planning permission.

Of that 8,000, only 900 major residential decisions were granted. This marks an 11 per wdecline compared to the same period last year, reaching the lowest level in over a decade. 

Minor residential permissions have also seen an eight per cent decrease.

These statistics were corroborated by the Home Builders Federation which used data from Glenigan to reveal a more pronounced decline of approximately 20 per cent.

HBF chairman Stewart Baseley says: “Over recent years, the policy environment has become increasingly anti-development and anti-business, and as a direct result, we are seeing a sharp fall in the number of homes being built.”

Despite these challenges, the Halifax House Price Index for August shows a 4.6 per cent year-on-year drop in average property values and a 1.9 per cent month-on-month decrease. 

But Akram says: “However, it’s important to recognise that these figures provide only a surface-level view, and the housing market’s intricacies become apparent when we delve into specific locations, cash buyer dynamics, and market segments.”

She continues: “Looking ahead to Q4 2023, we can anticipate further rate reductions, assuming the Bank of England’s base rate remains unchanged. With the two-year swap rate now lower than the base rate, it seems likely that rates will gradually decline, offering even more favourable financing options for homebuyers. 

“Moreover, we can look forward to some long-awaited lender innovation in mortgage products tailored to buyers of new homes, with promises of more flexible and attractive options on the horizon.”

She adds that as we approach the next general election – in January 2025 or possibly sooner – both major political parties have expressed a five-year aim to reach 70 per cent home ownership.

Furthermore, Prime Minister Rishi Sunak has hinted at the possibility of a new version of Help To Buy: Akram says this could further boost the housing market and provide vital support for aspiring homeowners.

She concludes: “As the year-end for 2023 approaches and with rate reductions on the horizon, we can remain cautiously optimistic about the future of the housing market. With falling mortgage rates, the potential for more sales and government initiatives, and a commitment to increasing homeownership, there are plenty of reasons to be positive about the road ahead.”