There's been plenty of talk of a V shaped recovery after the pandemic. But with an estimated 60,000 shortfall in built homes as a result of the Covid-19 lockdown, can the residential construction sector meet the government's target of 300,000 new homes a year?
Fortunately there are signs that the industry will demonstrate great bouncebackability and start delivering the affordable housing stock the UK needs before the end of the fourth quarter.
Demand is strong
Analysts don't expect the housing market to crash as it did in 2008, which is good news for the Big 10 house building firms. Their robust pipelines and high cash levels should leave them well positioned once lockdown and social distancing ease.
Strong demand and a high number of planning approvals are driving the construction of new builds which traditionally lead the housing market after a slump. Taylor Wimpey has been back at work since May but it remains to be seen how quickly small and medium-sized construction companies can get back on site after lockdown.
According to Brian Berry, CEO of the FMB, small housebuilders have been hardest hit by the Covid-19 lockdown, with faltering supply chains and stalled purchases impacting on cash flow.
With up to a third of new builds standing empty, and problems accessing government-backed loans, small construction firms are struggling to avoid a critical impact on their recovery. Add in the issues around safe working and there's no wonder that 69% of builders were forced to shut down 91% of their output.
Small construction companies bore the brunt of the 2008 financial crash. The predicted bounceback 6 months after lockdown ends will depend on the nation's rate of growth post-pandemic - growth that in part will be driven by the recovery of the residential construction sector.
Jason Rishover, CEO of Heronslea Group, a residential developer, is optimistic about the resilience of the property market. As he points out, people still moved during the financial crisis and the market has adapted quickly to the strictures of the lockdown, finding workarounds to anything from virtual viewings to social distancing.
Is this a signifier that consumer confidence and the property market as a whole will recover and start as quickly as it stopped? Although Brexit is still an elephant in the room, the chancellor is already talking of a V shaped recovery that will see the UK bouncing back in the second half of the year.
Much will depend on the support the government gives to small builders to get them up and running as quickly as possible. Support from lenders and planners is required to get the residential construction sector back to hitting its house building targets. Homes England have already bought sites worth £180 million to support a quick restart.
What seems certain, even amid the uncertainty of the 'new normal', is that construction will recover. What remains to be seen is how quickly that recovery can take place and whether the trifecta of consumer confidence, access to sites and finance will support small builders to drive the recovery.