Homebuilding decline will only make London’s housing crisis worse

The demand for decent quality housing in the capital is intense and unrelenting.

Yet, alarmingly, housebuilding activity appears to be in sharp decline.

At least that was one of the main findings of today’s S&P Global/CIPS UK construction survey for May. It showed that work on residential building projects fell for the sixth month running and at the steepest pace since the early days of the pandemic.

Putting the exceptional circumstances of the Covid era to one side, it was the lowest reading since 2009 when the aftermath of the global financial crisis laid waste to the construction sector.

Apart from all the obvious drags such as higher interest rates, labour shortages and weak consumer confidence, the end of the Help to Buy scheme appears to have had a huge impact on housebuilding this year.

Today’s survey findings echo the figures from industry data analysts Molior. Their latest report on London housebuilding found that construction starts were 43% lower in the first quarter, while sales of new homes were down 39%.

Perhaps even more worryingly, new planning applications have not just fallen to levels seen in 2009 but are almost 40% below them.

For homeowners concerned about the value of their property that is all good news. The supply drought means prices in London will probably not fall as steeply as some commentators predict.

But for those gazing up hopefully at the bottom rung of the ladder, patiently waiting for it to drop to within reach...there is nothing to celebrate.