Despite challenges including the current planning system, a skills shortage and uncertainty following the EU Referendum, housebuilders are forecasting increased growth and investment in the sector.
The second annual Lloyds Bank Commercial Banking report on the UK housebuilding sector analyses the state of the industry today, and the opportunities and challenges it faces in the future.
Although over a third of firms said that the uncertainty following the EU referendum result is the biggest challenge to their business, the research found that optimism about the future of the housebuilding industry has picked up slightly from 7.1 last year to 7.2 in 2016, with 10 representing the highest level of expectation.
It seems that this outlook has given the industry the confidence to invest, with average five-year investment plans up 17% year on year.
Housebuilders are also confident about growth, with 42% of respondents reporting that their growth forecasts had improved since the EU vote. They are now predicting an average growth of 28% over the next five years, up from 25% last year.
The remaining challenges that the sector highlighted, after the EU referendum result, include the rising cost of materials and the current planning system.
While the UK continues to face the housing shortage head-on, 22% of housebuilders do not believe the sector has the resources it needs to help the government achieve its targets for new housing, and 14% are unsure.
Firms also said that the availability of government support and suitable land are factors that impact the industry’s ability to meet targets for new housing.
Almost a third of firms said there are not enough skilled workers in the industry, with bricklayers, electricians, plumbers and joiners being the hardest to recruit.
Recruitment and skills therefore remain a focus, with three of the top priorities for firms over the next five years being recruiting additional staff, and investing in training and apprenticeships.
Pete Flockhart, head of housebuilders, commercial banking at Lloyds Bank, said: “Given the challenges that housebuilders face, the sector is painting a relatively optimistic picture, with improved growth and investment forecasts compared with last year’s survey.
“The wider uncertainty, coupled with the rising cost of materials, presents some challenges but the industry is taking steps to tackle these issues head on, and still plans to grow.”
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