With the effects of the pandemic all but over, the property development sector is seeing rapid growth as the property market gains strength. Experts are expressing that we can expect to see a boom in new home developments with investors optimising current market opportunities available to them.
Last year was a difficult year for all UK residents, with no one spared the devastating effects of the COVID pandemic. Lives were both personally and professionally impacted by lockdowns and strict COVID regulations, with many finding it hard to recover.
The housing development industry was no different, and following the first lockdown back in March 2020, returning to work was challenging due to constantly changing protocols and laws relating to the pandemic. Shortages of workers on a mass scale and drastic increases in the prices of building materials, which had already been an ongoing issue due to Brexit, contributed to the housing development problem.
The result was that the housebuilding industry saw a distinct decline during 2020, which was no surprise to anyone.
Despite all the obvious obstacles, the housing development sector still achieved a respectable £37.8 billion in construction output throughout 2020; however, this is the lowest figure seen since 2016. This signified an annual decline in value for the first time since 2012 and a significant decrease of 21% in comparison to 2019.
When comparing these figures with previously recorded data, we can see that this annual dip is the only one recorded since 2010, which indicated a drop of 5% in 2012. Following this decline, the building industry succeeded in achieving an average annual growth rate of 11% from 2010 to 2019, and despite the pandemic, it even managed an average annual growth rate of 8% by the end of the decade.
The more recent drop in annual growth was felt across the board; however, it was more pronounced in the public sector, with values dropping a whopping 32% as opposed to the private sector, where an average drop of 19% was reported.
So, what do these figures mean when it comes to the property development market? Based on the values provided and how many new-build homes were completed, the average price per home was calculated at £221,594. This figure is 32% less than the previous year and the lowest figure seen since 2017.
So, what can we expect for the future of the property development sector?
2020 saw some improvement in terms of growth in the industry, which is a positive sign for the future. The year saw 47,763 existing building firms, which continued to grow at an average rate of 6% over the last ten years, which is the highest level for this period on record.
With more businesses in existence, there are more jobs available in the sector. In figures, this is reported to be 230,000 in 2020, which is a 3.5% increase from 2019 and the highest level recorded for the last ten years.
So, it’s clear to see that despite the hardships the building sector has experienced over the last couple of years, it is picking itself up, dusting itself off, and getting back to the business of building much-needed housing for the British population.