There’s never been a better time to buy a new build
Martin Smith, Chief Executive at Muir Group
There is no denying that the challenges faced across the housebuilding and wider construction industry over the last few years have been particularly acute. A combination of planning and covid delays, inflationary cost increases for material and labour, rising cost of living and high mortgage interest rates all contributed to a negative ripple effect across the sector.
However, there have been real shoots of recovery in the last few months. Just a few weeks ago the inflation rate returned to something that we recognise as ‘normal’ and just above the Bank of England target. It brings a higher likelihood of interest rate cuts by the end of the summer and more affordable mortgages. More homebuilders are also reporting improved sales across Scotland and the UK.
Of course, the election being called may bring unrest to the economy, especially when any growth has been fragile at best. But having been in business for 50 years, Muir Group has weathered multiple economic storms. Despite the challenges faced, we have successfully come out the other side and I am confident the same will happen again.
Being family-owned, we are different to other developers as we can afford to take a longer-term perspective. Purchasing assets over a number of years, we are well placed to progress land led development opportunities with housing associations and other homebuilders across the country. Similarly, we have more flexibility to diversify and innovate. For example, we are building more new bungalows in light of Scotland’s demographic trends which show an ever ageing population. Although traditionally more popular with maturer age groups, single storey living is proving to be a hit with buyers of all ages.
Believe it or not, despite the challenges within the housing market and wider economy, there has never been a better time to buy a new build house. Rising interest rates and costs mean developers have reduced housing supply. Now that interest rates might be lowering, they won’t be able to recover fast enough to meet demand from prospective buyers who, taking advantage of these lower interest rates, may be in a more financially stable position than they were six or twelve months ago.
With consumer confidence returning, we are already seeing an uplift in sales and enquiries. It will take time for the market to be able to react and there is a potential that there will simply not be enough homes to meet demand. Wages are also outstripping inflation consistently and all of the economic indicators are pointing to another spike in families looking to buy homes. It’s a difficult juggling act for developers, but the fact is we are likely to experience a significant housing deficit for the foreseeable future. This is made all the worse by the cut in funding for social housing in Scotland, which has further dampened the market's ability to scale up homebuilding quickly.
Ultimately economic challenges like the ones we have faced are cyclical. We will likely experience them again. The objective should be, however, for us to get better at pre-empting them and taking measures earlier to ensure we can bounce back faster and more robustly.
For now, the next government, whatever colour that may be, will need to provide the economic conditions that allow businesses across the UK to plan. For homebuilders and homebuyers specifically, this stability will mean that more people will be able to have somewhere to call their own.
Martin Smith is the Chief Executive of Muir Group
