Brighter start to the year for developers

Chris Hemmings, Parter in Carter Jonas’ Planning & Development team

We’re confident of a better start to 2024 than 2023.

The news that inflation is beginning to come down is good news all round and should lead to a slowing in the increase of construction costs and possibly no further changes from the Bank of England to interest rates in the months ahead.  The underlying fundamentals remain in the housing market with a lack of new build supply and pent-up demand, so when confidence returns, we should see a positive impact on the development market.

May’s local and mayoral elections are unlikely to have a significant impact on the development industry. In fact, some developers are fast-forwarding planning applications with the hope of gaining consent prior to the local government purdah period.

Speed up

The big question is how the imminent general election will impact on the market. There will inevitably be a lull in activity when the election is announced so that all actors can assess the potential impacts and changes from manifesto pledges.

That said, any short-term delays may be mitigated by land sales which should be gearing up for a more positive 2024 and any general election ‘bounce’ in the economy, following the last few years of uncertainty created by the pandemic, conflicts and the resultant inflationary impacts.

It is important that any increase in activity can be supported by the public sector in the form of planning staff to determine planning applications, especially as the public finances has been under enormous strain in recent years, with a number of bankruptcies announced or imminent.  Further cut-backs in this area may have the effect of slowing down development at a time when the market is well placed to speed up.