Quarter 4 2023 will be remembered as the period when house building activity hit a low and bounced back. There was a continuing dearth of housing starts following a stock build in Q2 to potentially avoid the impact of changes to Building Regulations Part L. Part L covers the conservation of fuel and power in new homes in England, and establishes how energy-efficient new and existing homes should be.

Reduced housing demand in 2023 was a testing time for everyone, with more competition chasing less activity. However, there was a softening of the macro factors which contributed to the reduction in house building, such as a deceleration of inflation, interest rate stability and subsequent cuts in mortgage rates among major lenders. Announcement of employee tax cuts and a larger than expected increase in National Living Wage has helped to improve sentiment going into 2024, reflected in improved Consumer Confidence scores. A low of -38 in February 2023 improved to -19 in January, the most positive in two years. It fell back in February to -21. But ‘optimism for our personal financial situation for the next 12 months’, one of the five component measures of GfK’s Confidence Index, registered zero again, having been as low as -18 last February. This is a critical measure because confident householders are more likely to invest in major spending decisions.

There is certainly a lessening pessimism moving into 2024. However, the acid test will be the government’s spring statement, and if there is specific support for the housing market. The most impactful initiative would be to offer first time buyers a meaningful support package, one that stimulates affordability for first time buyers in the new build sector.

The industry needs clarity on how the housebuilding and construction sector is going to tackle upcoming legislative and building safety requirements with The Future Homes Standard due to arrive in June 2025. Cooling and heating of new homes is an ever-evolving area, and 2024 may well be the year when the housing supply industry drives further forward with renewable solutions such as Underfloor Heating and District Heating.