According to the UK government website, the level of construction output in January 2022 was 1.4% (£197 million) above the February 2020 pre-coronavirus (COVID-19) pandemic level.
In the United Kingdom, 2019-2020 was a difficult time due to the Covid-19 pandemic. The pandemic had a large impact on the economy, with construction being one of the sectors most affected. The construction industry is worth around £120 billion to the UK economy and employs over 2 million people.
The pandemic caused many construction projects to be put on hold or cancelled altogether. This led to a decrease in demand for construction loans. However, the industry is beginning to recover, and construction loan demand is starting to increase again in 2022. The trend is being driven by a number of factors, including the government’s commitment to infrastructure investment and the housing market recovery. Below are the Construction financing trends:
Construction financing trends
Increased Government Intervention
The government is committed to infrastructure investment: The UK government has pledged to invest £600 billion in infrastructure over the next decade. This includes investments in housing, transport, and digital connectivity. This commitment will help to drive demand for construction loans as projects get underway.
The housing market is recovering:
The UK housing market in 2022 is showing signs of recovery. House prices are starting to rise again, and mortgage approvals are at their highest level since 2007. This is good news for the construction industry, as increased demand for housing will lead to more construction projects. This in turn will drive up demand for favorable construction loans.
Material Shortages and Delays:
There has been a global shortage of building materials, due to increased demand from China and other countries. This has led to delays in construction projects as builders struggle to source the materials they need. The situation is slowly improving, but it may take some time for construction projects to get back on track.
Backlogs in Loans and Projects:
The pandemic caused many construction projects to be put on hold or cancelled. This led to a backlog of loans and projects that need to be financed. As the industry starts to recover, there will be an increased demand for construction loans to finance these backlogged projects.
Residential Real Estate Market is Still Hot:
The residential real estate market is still strong, despite the pandemic. This is good news for the construction industry, as increased demand for housing will lead to more construction projects. This in turn will drive up demand for favorable construction loans.
Real Estate Construction and Commercial Needs:
The commercial real estate market is also starting to recover. This is great for the construction industry, as increased demand for office space and other commercial buildings will lead to more construction projects. This improves the chances for those seeking a construction loan.
Credit Unions Must Adapt to the Market:
As the construction industry recovers, credit unions will need to adapt to the new market conditions. This means offering competitive rates and terms on construction loans. It also means being flexible and understanding the needs of borrowers.
Online lenders are getting in the game:
As the construction industry recovers, online lenders are starting to offer construction loans. This is good news for borrowers, as it gives them more options when it comes to financing their projects.
The construction industry is showing signs of recovery in 2022. This is good news for borrowers, as it will lead to increased demand for construction loans. To meet this demand, lenders will need to offer competitive rates and terms. They will also need to be flexible and understanding of the needs of borrowers – Get in touch with one of our professionals at Funding Bay.
