We talk to our Relationship Director Mick Howard about what is driving the housing market in Yorkshire and the Humber and how SME housebuilders are responding.

In the latest in our series of articles on England's regions, we talk to Relationship Director Mick Howard about what is driving the housing market in Yorkshire and the Humber and how SME housebuilders are responding.

What are they key drivers of the market in Yorkshire at the moment?

Demand for good quality housing with outside space continues to be strong across the region. Demand is particularly robust in areas within commutable distance to the main economic centres or are in proximity to good transport lines.

There are numerous reasons why people want to live in Yorkshire and the Humber. It has areas of outstanding beauty, a great coastline, vibrant cities in the likes of Leeds, Sheffield and York, world class universities and a strong economy.

However, despite its appeal, the region is the second smallest in terms of new completions in England. The latest Government stats show there were 13,380 homes completed in the year to the end of March. I can only see that number increasing as more people look at the area. 

Are there any particularly strong areas of housebuilding activity?

Build-to-rent continues to be strong in city centres such as Leeds, with more standard residential stock still very much driven by towns and villages on the edge of the larger locations.

How has the pandemic changed demand for the types of housing in the region?

Undoubtedly, the pandemic has seen a real desire for purchasers to require more outside space and flexible accommodation to aide working from home and the new normal. That is reflected in the development finance proposals from housebuilders I am seeing across my desk.

A trend we have seen over the past year is strong house price inflation in Yorkshire, which is understandable given its growing popularity. Government statistics show that house prices in the Yorkshire and Humber have risen 15.8% over the past year, the third highest rate of inflation in England.

Despite this, average house prices in the region remain amongst the lowest in the country. At £194,518, the average cost of a home in the region is only lower in the North East. Of course, this is only an average and some of the most popular areas of the region have experienced annual house price growth of nearly 30%. 

What are they key challenges SME developers are facing in the region currently?

Very much the challenge at present is the continued rise in build costs and pressure on labour supply (trades). There is also a general lack of available land, which is again driving land prices upwards. However, our clients are coping well with these issues and are generally upbeat about their prospects in the coming year.

Leeds seems to be attracting a lot of investment with Channel 4 locating its headquarters in the city, plus it will be the 2023 City of Culture. Are you seeing developers targeting the city as a result of its growth?

The larger developers are still very much active in the city centre with a strong pipeline of private rented sector and build-to-rent schemes coming through planning or starting to be constructed.

Leeds experienced years of a lack of newbuild stock, in particular apartment schemes, after the surge in construction that proceeded the global finance crisis, which led to oversupply in the city. That has now been addressed and we are starting to see fresh new build completions coming to the market.

Yorkshire is a popular tourist destination. Are SME developers seeing much demand from investors for holiday lets?

The mainstream developers don't seem to have much demand for Holiday Lets. Yorkshire as a whole however has seen a huge summer of staycation visitors with the accommodation for these largely picked up via smaller developers or buy-to-let investors.

Mick Howard
Relationship Director