Despite an overall upbeat assessment of construction output from the Purchasing Managers’ Index in its most recent report, it shows the housebuilding sector is in a state of crisis, according to the Federation of Master Builders.
May ‘s PMI Index (from CIPS UK and S&P Global) showed a “modest upturn” in overall output, but this was driven by “faster rises in commercial building and civil engineering.” Housebuilding remained “by far” the weakest performing category, said the CIPS (Chartered Institute of Purchasing and Supply),
Explaining this weak performance, CIPS commented that: “worries about the impact of higher interest rates and subdued market conditions continued to dampen activity.” Work on residential building projects decreased for the sixth month running and at the steepest pace since May 2020. Aside from the pandemic-related downturn, housebuilding’s performance was the lowest for over 14 years, said CIPS.
The Federation of Master Builders responded by saying the housebuilding sector was “in crisis,” with “too few homes being delivered and not enough being done to boost the market.”
Brian Berry, FMB chief executive said: “This latest data makes for worrying reading. We need to see Government get to grips with this issue as it is vital to secure a healthy, growing economy. The 300,000 housing target must be reinstated to give hope to both consumers and housebuilders alike that it is serious about increasing the supply of new homes.”
He continued: “For too long we have not been building enough homes. What is very concerning is that the Government lacks a clear plan to solve the housing crisis, with the result being that the housing market continues to soften, and housing remains unobtainable for many members of the public.”
There was some good news from suppliers from the May CIPS update, in that conditions had “improved considerably,” with average lead times for the delivery of products and materials reducing by the greatest amount since August 2009. This was attributed to fewer logistics bottlenecks, and “an improved balance between demand and supply.”