The UK housing market will remain stagnant without government intervention to address rising construction costs, according to tax and business advisory firm Blick Rothenberg.
The firm has warned that the government’s target of delivering 1.5 million new homes during this parliamentary term is at risk, with construction cost inflation currently running at more than 10 per cent.
Construction workforce investment needed
Heather Powell, a partner at Blick Rothenberg, said the government must invest in attracting and training new workers to help slow construction cost inflation. “The Government can make a contribution to slowing construction cost inflation by investing in attracting and then training new workers,” Powell said.
She added that attracting school leavers to the industry and ensuring they receive adequate training to work effectively on sites and embrace modern construction methods requires collaboration between government and construction companies.
The firm argues that the ability to build homes at prices affordable to first-time buyers and families moving up the property ladder is not being adequately addressed. Similar concerns about government intervention to curb rising property costs have been raised across different segments of the market.
Affordability concerns
Powell noted that home purchases represent both an expression of confidence from buyers and evidence of success in accumulating required deposits, particularly for first-time buyers. “New homes at a price that are affordable, and mortgage rates that ensure monthly payments are within the budget of individuals and families are critical,” she said.
The construction cost challenge comes as local authorities face pressure to address housing supply issues through various mechanisms, including dealing with empty properties.
Blick Rothenberg described the current housing market as stagnant and in need of re-invigoration to meet the government’s ambitious housebuilding targets. The firm’s analysis suggests that without action on construction costs, market growth will remain constrained regardless of other policy interventions.
