On the eve of the Spring Budget, construction industry experts from Birmingham City University (BCU) have called on the Chancellor to kick start the new build homes sector in order to stimulate economic growth and combat the UK’s housing crisis.
Mike Leonard, Visiting Professor from the Centre for Future Homes at BCU, said: “Jobs are being lost, factories are shutting and we have massive shortfall in the delivery of new homes as homelessness and frustration grows amongst those directly affected.
“Failure to act now will see a major loss of skills and manufacturing capacity. This will leave industry less able to meet demand when the market improves and more reliant on material imports and migrant labour.
“The budget on Wednesday offers the Chancellor the opportunity to pull the levers to switch the housing market back on and inject swift growth into our stalled economy.
“The multiplier effect of new build housing creates jobs and social value. Now is also the time to invest in retrofitting our existing homes and buildings.
“The industry has the manufacturing capacity, skills, and oven-ready projects. The UK has a golden opportunity to grow the economy and get Britain building the homes and infrastructure this country so desperately needs.”
Dr Steve McCabe, Associate Professor in Strategy, Management and Marketing at BCU, echoed Dr Leonard’s concerns.
“At a time when we need to focus on economic growth and boosting productivity, politicians across the political spectrum need to focus on construction as a catalyst to drive the economy,” said Dr McCabe.
“Construction contributes nearly 9% of GDP and critically has the potential to benefit every community across the UK.”
According to the Organisation for Economic Co-operation and Development (OECD), new mortgage lending has declined markedly which has significantly reduced demand for houses built by developers.
Money tightening, which has led a consequential dip in confidence and slowdown in commercial and infrastructure projects, has combined with a knock-on impact on demand for labour and materials in new housing and home renovation that is undermining economic growth.
According to Dr McCabe, there is no lack of demand for housing, however, he believes that consumers that are already suffering from the effects of the ‘cost of living crisis’ feel under pressure because of what are considered excessive mortgage repayments:
“New purchasers are confronted by an affordability conundrum resulting from lack of market activity as sellers hold off moving,” he added.
“What’s apparent is that the high cost of financing for companies in the UK construction, particularly for smaller companies, is making liquidity a tremendous challenge. “Without urgent intervention from the chancellor tomorrow, we’re likely to see an increase in insolvencies, administrations, company restructuring, factory closures and redundancies in construction which is so fundamental to this country’s economic development and collective prosperity.”
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