Brick delivery data a useful guide to state of the market

UK brick deliveries are a useful proxy for house building starts in the absence of monthly starts data, explains Noble Francis, Economics Director at the Construction Products Association. Giving a useful insight into the latest set of data, Noble reveals: “Deliveries in February 2024 were 49.1% higher than in December 2023’s nadir (which was at financial crisis levels) and 12.0% higher than in January but 5.6% lower than a year ago according to the Department for Business and Trade (DBT). Deliveries and starts are low over Winter before house building ramps up in Spring and site activity in January and February 2024 was also affected by persistent rain that was considerably worse than a year ago. Deliveries have risen in two consecutive months, but this is from a low base, and they remained 39.2% lower than the average between 2018 and 2019. The profile of deliveries is in line with major housebuilder reports, which highlighted that activity reached a low point in November and fell even further in December before improving in January and February.

“ It is still early in the year so it is difficult to get a clear sign of house building starts for 2024 before the Spring selling season (which will be critical to house builders) and before we see how quickly interest rates and mortgage rates fall. However, year-to-date (January-February), brick deliveries in 2024 were 5.3% lower than in 2023 and 34.6% lower than the peak of the market in 2022. Deliveries year-to-date in 2024 were even 25.0% lower than in 2020, when construction was forced to shut down in the initial pandemic lockdown and was working at lower productivity on site due to social distancing for the rest of that year.  Deliveries and starts in January and February 2024 being lower than a year earlier is unsurprising given the carry-through of slow activity at the end of last year plus the start of this year being weather affected. So, better weather in March and Q2 may see an improvement in deliveries and starts. Plus, housing market sentiment appears to have slightly improved since the start of the year after slight falls in mortgage rates, which may also lead to a further improvement in demand compared with the end of last year. Despite this, significant rises in deliveries and house building starts are only likely as interest and mortgage rates fall further and homebuyer affordability improves considerably in 2024 Q4 and 2025.”