A cooling housing market is likely to spell trouble for the UK construction sector, with a potential decline in employment levels on the cards for the first time since 2014, according to research by RIFT.
The tax specialist believes that “all signs are currently pointing towards a slowing property market across the UK”.
RIFT cited figures showing a 2.6% drop in new homes reaching the market compared to pre-pandemic levels. Additionally, homebuyer appetite has decreased, the company said, with buyers only purchasing 43% of available stock so far in 2023, compared to 60% in 2022 and 63% in 2021.
Mortgage approvals have also fallen by 20% between 2021 and 2022, partly due to the reduction in higher loan-to-value products available to buyers. This has led to a decrease in house prices since September 2022, according to Nationwide’s House Price Index.
RIFT expects the construction industry to be impacted by this slowdown, as a lack of demand from buyers is likely to discourage developers from bringing new stock to the market. This could lead to fewer homes being built and less demand for those working in the construction industry.
Despite the fact that there are currently over 1.391 million people employed in the UK construction sector – the highest level since the turn of the millennium – growth has been slowing down steadily, RIFT said. As the wider housing market begins to slow, it is likely that the number of construction sector employees could fall for the first time since 2014, the company added.
Bradley Post, RIFT CEO, said: “We’ve just witnessed an incredible period of boom where the UK housing market is concerned and this high demand from homebuyers has helped push the number of those working within the construction sector to its highest this millennium.
“However, we have seen signs that this boom period is coming to an end, with employment growth across the sector stalling on an annual basis.
“With many indicators suggesting that the UK housing market is now starting to cool, we expect the nation’s big house builders to tread with more caution over the coming year and this will inevitably mean less demand for those working within the construction sector leading to a reduction in employment levels.”
Use it or lose it! If they won’t build, the land should be compulsorily purchased for social housing.
They’ve made obscene profits from taxpayer-funded schemes such as help-to-buy [help to lease!] and built poor quality houses, then made additional profits from selling the leases to ground rent investors. The gravy train must stop!
At least there will be more trades available for smaller jobs, which should reduce prices.
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