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26 Apr

Housebuilders report major profits post pandemic – how has it happened, and will it last?

It’s been widely reported that a string of Britain’s major housebuilders have seen their profits boosted in the two years since the pandemic hit; with so many businesses negatively impacted by Covid and Brexit it bears the question how has it happened, and is it destined to last?

Buyers encouraged by stamp duty holidays and record low interest rates, coupled with accidental savings as a result of lockdown restrictions stormed the market searching for more spacious homes.

Borrowing costs have been comparatively low enabling housebuilders to obtain finance and buyers to obtain cheaper mortgages, generating more spending power across the board. It is understood that many housebuilders are pressured to spend their budgets within a set time period or they lose it, so with their financial years often aligned a competitive ‘race for space’ is created which naturally drives land values higher which purchasers have been able to cover with new cash reserves.

During the pandemic, households discovered they had less spare space than they did a couple of years ago with has resulted in bedrooms doubling up as offices and homeowners embarking on extension projects to create new office space. This squeeze for space, combined with the above factors has prompted many people to extend (if they can) or move.

The pandemic has also refocussed people on what is important to them, leading to a surge of moving from city centre flats to houses with private gardens. There has also been a migration of people moving from London to the relatively cheaper North.  Equally, the terrible Grenfell disaster has made renters and buyers nervous about safety on cladded apartments and costs relating to it, so buying a new build with a 10 year warranty is an attractive alternative with many looking to take charge of their own destiny.