Construction employment is expected to fall for the first time since 2014 due to a slowing property market and a decline in housing delivery, according to RIFT
With the latest figures on new homes at -2.6% across the UK, signs indicate a slowing housing market. So far in 2023, just 43% of the available housing stock is being bought, down from 60% in 2022 and 63% in 2021.
Figures on mortgage approvals also support this downward trend where buyer activity is concerned, with the number of approvals falling by 20% between 2021 and 2022.
Fall in housing stock is a main contributor to the decline in construction employment
Following the mini-budget in September, the number of higher loan-to-value products available to buyers has been dramatically reduced, meaning buyers must put down considerably higher deposits to secure their purchase.
This combination of factors has contributed to a fall in house prices in recent months, with figures from Nationwide’s HPI confirming a fall in house prices on a month-to-month basis since September last year.
What does a fall in house prices mean for the construction industry?
A lack of appetite amongst buyers is likely to mean a decrease in developers bringing the stock to the housing market, which has a knock-on effect on the number of homes being built and a decrease in construction employment.
Over 1.391m people are currently employed across the UK construction sector. However, while this total level of employment has seen consistent year-on-year growth since 2015, the growth rate has also been slowing steadily and, in 2021, remained flat.
With the wider housing market now also on the turn, it is likely that the number of those within the construction sector could be set to fall for the first time since 2014.
Employment growth across the sector is stalling on an annual basis
CEO of RIFT, Bradley Post, commented: “We’ve just witnessed an incredible period of the boom where the UK housing market is concerned, and this high demand from homebuyers has helped push the number of those working within the construction sector to its highest this Millennium.
“However, we have seen signs that this boom period is coming to an end, with employment growth across the sector stalling on an annual basis.
“With many indicators suggesting that the UK housing market is now starting to cool, we expect the nation’s big housebuilders to tread with more caution over the coming year, and this will inevitably mean less demand for those working within the construction sector, leading to a reduction in employment levels.”
