The outbreak of Covid-19, and lockdown restrictions that followed, saw the majority of construction sites in Wales forced to close pausing new home development, says a new report from Savills research team.
“Prior to lockdown, Wales was experiencing a strong price growth and high levels of new build development. It seems likely that this strength will support recovery when restrictions are lifted,” says Caroline Jones from the development team at Savills Cardiff.
The tail end of last year saw the highest number of planning consents since records began in 2011 with the number of homes delivered peaking at 9,101 in the year ending December 2019. This number fell marginally in March before most constructions sites in Wales closed on the 22 April.
As of the 13 May sites with a capacity for over 3,500 units reopened but progress is expected to be hampered by supply and demand as well as social distancing measures.
“Assuming housebuilders are able to work back up to 80% of their previous capacity by the end of the year, we would expect rate of delivery to be 30-35% below the 2019 output,” continues Caroline. “Most development activity is supported by private sales and, although most construction sites have reopened, sustained activity will depend on the return of buyer demand.”
An uplift in activity may be supported by tenure switches to affordable housing as the Welsh Government remain keen to meet its affordable housing target of 20,000 new homes during the current electoral term.
Activity, particularly new enquiries, declined as a result of lockdown and further research from Savills, who surveyed almost 700 buyers and sellers at the end of April, showed buyers were predictably cautious about the short term but expressed a greater desire to move within the next 24 months than previously, with a particular emphasis on moving for more space and better access to the countryside.
Caroline concludes:
“It seems likely that lockdown will cause supply to underperform against previously set benchmarks but the impact of this on the development industry will depend on the speed at which construction resumes normal activity.”
“Wales’ strong house price growth prior to lockdown, supported by the relative affordability of housing in Wales, should support price growth over the medium term.”
