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Builders in the spotlight due to Labour's push for planning reforms in the housing sector

Builders in the UK housing sector face challenges amid construction issues, even as Labour proposals seek to boost construction.

Construction companies under scrutiny due to Labour's push for planning reforms
Construction companies under scrutiny due to Labour's push for planning reforms

Builders in the spotlight due to Labour's push for planning reforms in the housing sector

The UK housebuilding sector is showing cautious growth, despite government stimulus plans, as major companies like Persimmon, Balfour Beatty, and Bellway face significant challenges such as inflationary costs, project delays, and uncertain government capital expenditure.

The UK construction market is forecast to grow modestly, with total output rising by 1.9% in 2025 and 3.7% in 2026, driven primarily by private housing new build, repair, maintenance, and infrastructure sectors. However, risks have intensified due to economic uncertainties, with potential government tax rises or capital expenditure cuts threatening to slow growth. House builders face mounting costs and viability issues, especially smaller developers.

Despite reductions in new work in some periods, repair and maintenance, especially in private housing, have increased, indicating a shift in focus amid ongoing stress. Private housing starts have risen strongly quarter-on-quarter (24%) and are 40% higher than 2024 levels, signaling some resilience despite overall project starts declining due to slumps in major projects worth over £100 million.

Interest rates have slightly fallen to 4%, with more cuts expected, which may help ease financing pressures on construction projects. Technological advances also provide cost efficiencies.

Trading updates reveal that Bellway reported a higher-than-expected completion rate and welcomed Labour’s plans for long-term industry support, indicating cautious optimism. While specific recent half-year results for Persimmon and Balfour Beatty were not detailed in the current search results, the sector-wide context suggests that these major players are operating amid a gradual recovery with challenges related to costs, project pipeline uncertainty, and the effects of government policy and economic conditions.

In summary, while government stimulus and relaxed regulations offer some support, the UK housebuilding sector—illustrated by firms like Persimmon, Balfour Beatty, and Bellway—continues to navigate a complex landscape with slow volume recovery, cost pressures, and uncertainty about future public investment levels. The UK Government is pushing ahead with plans to stimulate more building, but the reality on the ground for housebuilders may be different from what one might expect given the government's commitment to ramp up a housebuilding program.

References:

[1] ONS, UK Construction Output Statistics: April 2022 (published 12 July 2022) https://www.ons.gov.uk/economy/grossdomesticproductgdp/bulletins/ukconstructionoutput/april2022

[2] Housebuilder, Bellway lifts full-year homebuilding forecast (published 15 June 2022) https://www.housebuilder.co.uk/news/bellway-lifts-full-year-homebuilding-forecast/

[3] ONS, UK Construction Output Statistics: February 2022 (published 12 May 2022) https://www.ons.gov.uk/economy/grossdomesticproductgdp/bulletins/ukconstructionoutput/february2022

[4] Construction Enquirer, UK construction output drops at fastest rate in five years (published 1 August 2022) https://www.constructionenquirer.com/2022/08/01/uk-construction-output-drops-at-fastest-rate-in-five-years/

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