As we reflect on the housing and property sector in Scotland during 2023, it’s clear that the year has brought about significant shifts and challenges. From a transition in build programs to the impact on operations, several factors have played a role in shaping this part of the industry’s trajectory.
The transition from Big Programs to Break:
One notable trend in the Scottish construction industry during 2023 has been the move away from speedy investment into large-scale construction programs. For many housebuilders, focus over the course of the year has been towards more targeted and focused projects. This shift suggests a strategic re-evaluation of priorities and resource allocation within the sector.
Within the affordable sector, many builders have moved to more land-led opportunities to preserve a rapidly eroding margin from all sides.
Slowed Build Programs:
As a direct impact of the fluctuating mortgage rates, inflation and a consistently slow planning process, there has been a noticeable slowdown in build programs.
Slow sales have impacted the number of new sites opening and cancellations have resulted in some of the larger housebuilders having to manage “stock” housing.
Affordable housing projects have experienced delays in planning, influencing project timelines and potentially affecting overall industry productivity. This slowdown has had implications for both large construction firms and smaller contractors.
Impact on Operations:
The housing sector in Scotland has witnessed a ripple effect on operations due to the changes in construction programs.
With a reduction in big programs and slowed build initiatives, there has been a subsequent decrease in management roles and fewer opportunities for site managers.
This shift has necessitated adaptability and resilience within the workforce. With a slower build programme, there has been less of a need for assistant site managers and contract managers. Many assistant site managers have returned “to the tools”, filling the gap in available trades.
Demand for Astute Commercial & Technical Staff:
Despite the challenges, there remains a consistent demand for astute commercial and technical staff in the housing sector. Companies are recognising the importance of retaining skilled professionals who can navigate the changing landscape and contribute to project success. However, budgets are under pressure, requiring a delicate balance between talent acquisition and financial considerations.
Growth in Affordable Homes and Ongoing Land Purchases:
Amidst the challenges of 2023, there has been a silver lining in the form of growth in affordable homes. The first quarter of 2024 is expected to witness an uptick in affordable housing projects, signalling a positive trend for the industry. Ongoing land purchases further reinforce the optimism, indicating that key players anticipate a more favourable environment in 2024.
Reactive Tightening in the 1st Half, Consolidation in the 2nd:
The housing sector in Scotland experienced a reactive tightening in the first half of 2023, as companies responded to changing circumstances. However, the second half of the year saw a shift towards consolidation, reflecting a more stabilised and adaptable approach to the evolving construction landscape.
Outlook for 2024:
As the year draws to a close, the new-build housing sector in Scotland is cautiously optimistic about the future. The expected growth in affordable home projects breaking ground, ongoing land purchases (by those who have the financial funds to do so), and a strategic shift towards consolidation suggest that 2024 could bring renewed stability and opportunities for growth.
The new-build housing sector in Scotland has navigated a challenging landscape in 2023, marked by transitions in construction programs, operational impacts, and strategic moves by key players. Despite these challenges, the industry remains resilient, with a demand for skilled professionals and positive indicators pointing towards a more promising 2024.