Housebuilder profits halved during pandemic

Research from Sirius Property Finance has revealed that the pandemic halved the profits taken by the nation’s biggest housebuilders, and the industry is still yet to completely recover.

The real estate debt advisory specialists analysed the pre-tax profits of the nation’s 12 largest housebuilders and found that they have fallen from £5.4bn in 2019 to £2.7bn in 2020, a decline of around 49%.

Worst hit developers include Keepmoat, whose profits declined by 152% between 2019 and 2020, followed by Countryside (-77%), Redrow (-66%), and Taylor Wimpey (-64%).

The limited data available on 2021 profits also revealed early signs of recovery for the majority of developers, with all but one developer who have published profit reports seeing positive bounce back.

Despite this uplift, no developer has managed to work their way back to pre-pandemic profits in 2019.

Managing Director of Sirius Property Finance, Nicholas Christofi, commented: ‘While much of the property market enjoyed a pandemic-inspired boom, housebuilders and developers were not so lucky. Initial workplace restrictions caused construction sites to shut down for a period of time and, when allowed to reopen, COVID continued to cause problems both on site and across the global supply chain, sending the cost of materials skyward.

‘Furthermore, economic uncertainty meant that backers and investors were less inclined to pump money into major developments until the dust had truly settled. All of this meant that in 2020, less projects were completed and those that were took much longer and cost a great deal more than planned. Hence the significant decline in annual profits more or less across the board.

‘The good news is that signs of a recovery are now showing and while pre-pandemic profits have not yet been reclaimed, the industry is definitely moving in the right direction.’

In related news, insulating the UK’s housing stock is a crucial component of the nation’s net zero ambitions, but we risk doing more damage to the environment and the air we breathe unless we rethink how we retrofit, discovers Chloe Coules.

Photo by Brett Jordan