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The Home Improvement Index 2024

Short-term trends

The build-up of excess savings from reduced spending on holidays and entertainment and the sense of being caged during lockdown generated a surge in home improvement in 2021. That exuberance in the market has now yielded to the downward pressures created by a cost-of-living crisis and a desire to cut energy bills.

The effect has been a hefty decline in applications for home improvement and a switch in the mix of work being undertaken.

The current cocktail of influences on the market has not only led to significant shifts in the type and amount of improvement work being carried out, but it has also reshaped where work is taking place and the sorts of households most likely to invest in their homes.

The sharp fall in applications is starkly illustrated in the chart below. The clear implication is that work in the home improvement sector must be falling, and this is the view of most analysts in the sector.

Confusingly, this view is in sharp contrast to the official (ONS) data for private housing repair, maintenance, and improvement (RMI), as the chart also suggests. But the Barbour ABI data does appear to support deep and growing concerns among industry analysts that the official data is out of step with what is happening on the ground.

Home improvements applications and private housing RMI GB monthly figures and 12-month moving average

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The chart shows how applications for home improvement have been falling since hitting the 2021 peak. Yet, according to the ONS figures, private sector housing RMI has continued to rise. Data from builders’ merchants who supply most of the materials used for home improvement have suggested for many months that workloads in the sector have been falling. The Builders Merchants Building Index that measures sales suggests that the volume of sales in 2023 were 13.7% lower than in 2022 when adjusting the revenue from sales for inflation.

The upshot is that there are huge challenges ahead for those working within the home improvement sector, not least dealing with falling demand. However, there are also opportunities as the shape of the workload mix changes.

Key changes in the location of activity

All regions saw a drop in applications in 2023, with Wales and North West, and East England seeing the biggest falls. Only London escaped a double-digit percentage drop in applications over the year.

But the falls last year need to be put into the context of the 25% surge in applications across Britain witnessed in 2021. London enjoyed less of a rise than all other regions. So, it’s little surprise that the retreat from the peak was softer.

When we compare the change in applications from pre-pandemic 2019 to 2023, London fared worse than most regions with a 10% drop. Only Wales and the North East topped that with drops respectively of 13% and 12%. On this measure the West Midlands came out as the most resilient market in and out of the pandemic, with a drop of 4%, followed by the East Midlands and the South West where applications were 6% fewer in 2023 than in 2019.

But within these regional shifts in the market there were varied and significant changes at a more local level. And, looking closer at individual local authorities, certain patterns emerge.

Change in applications from 2019 to 2023

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Flight to the countryside: A disproportionate number of those where home improvement applications were above their 2019 level in 2023 are in or near to highly attractive parts of Britain. Some of which were perhaps less fashionable in the past. In Dumfries & Galloway in Scotland, Broadland and South Norfolk in the East, and Rossendale in the North West applications were all well above pre-pandemic level.

This supports the view that there was a flight to rural idylls associated with the spread of working from home. Interestingly the well-established favourite among retirees, South Hams in the South West, also features in the list of boroughs where applications in 2023 were above the pandemic level.

Seaside attraction: It is also intriguing that Blackpool, despite remaining firmly at the bottom of the national table, also saw a big bump up in home improvement applications between 2019 to 2023. This may add weight to suggestions that the pandemic might have nudged some investment in homes in coastal communities. While far from conclusive, comparing the changing in applications suggests coastal local authorities did fare better than the rest between 2019 and 2023.

A change of emphasis: If we use classification types to distinguish between areas (see Drivers/Location characteristics) and compare 2019 with 2023 data, we see there is evidence of distinct shifts in activity between different types of locations. The shares of overall applications in “outer suburbs” and “high density urban core” were down in 2023 compared with 2019, while the shares in both “rural residences” and “inner city & town centres” rose. This was most evident in north of England and Wales.

For all these changes the strongest markets remain in London and the South East, as can be seen in the table of the Top 25 local authorities. Interestingly, activity in Kensington & Chelsea has surged of late bringing it back to the top of the list of boroughs for applications per 1,000 private homes.

More details on the performances of the regions and local authorities can be found in the following sections.

Key changes in the types of activity

Changes in the home improvement sector wrought by Covid are still playing out. Applications for home offices, garden works, and roof terraces, which shot up with the spread of the pandemic, are still above their pre-pandemic levels. However, the surge has passed, and the numbers are in sharp decline since the 2021 peak.

Other influences on the market are now dominating, such as the cost-of-living crisis and high energy prices. These have prompted a surge in applications for solar panels and applications that include insulation, albeit from a lowish base. The upshot is that the home improvement landscape is very different from that seen in 2019 as the chart illustrates.

Change in applications 2019 to 2023

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Applications for the big-ticket work of extensions and loft conversions are down since 2019, extensions by 35% and lofts by 26%. Garages and garage conversion are also down and the decline in applications for conservatories continues.

On the upside, the demand for home offices appears to continue which suggests a structural break with pre-pandemic days. And there seems to be life left in the desires raised among households during the pandemic to upgrade the outside space as the strength of applications for garden work and buildings suggests.

Meanwhile, as the cost-of-living crisis bites and energy costs continue to concern home owners, investment in insulating homes and installing solar panels has rocketed. Applications for solar panels are double that in 2021 and almost two and half times what they were in 2019. Applications citing insulation are 60% up on 2021 figures and almost one and a half times the level in 2019.

Unsurprisingly, the suggestion in the data is that the resilience in the home improvement market tends to be greater within the wealthier regions of Britain. As the cost-of-living crisis bites deeper into savings and dampens enthusiasm to spend, the chances are that this pattern will become more established.

Top 25 local authorities

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The rankings are based on the number of home improvement applications, as defined by Barbour ABI (see methodology), per 1,000 private homes. The data tables are for local authorities before the recent formation of Westmorland and Furness, Cumberland Council, Somerset Council, and North Yorkshire. Shetland, Orkneys, and City of London are not included in the tables given their relatively small populations.

Bottom 25 local authorities

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The rankings are based on the number of home improvement applications, as defined by Barbour ABI (see methodology), per 1,000 private homes. The data tables are for local authorities before the recent formation of Westmorland and Furness, Cumberland Council, Somerset Council, and North Yorkshire. Shetland, Orkneys, and City of London are not included in the tables given their relatively small populations.

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Explaining the queries with the ONS data:

The strength of using the Barbour ABI data in this debate is that it shows a very strong correlation with the ONS data up to the peak, but a negative correlation after. Many leading analysts suggest that the ONS data initially understated the impact of inflation in its conversion of value of work to volume of work. This would overstate the volume. Now there are concerns over what statisticians and social scientists might call survivorship bias. It may be that the losses of many local builders are not accounted for within the ONS data in a timely fashion when it is scaling its sample. Losses of firms do present a challenge as the records of their demise often lags significantly after the firm goes bust. This would mean that they are in effect scaling up the sample too much. It may also be that within the sample the respondents who are successfully trading are responding and that those who may have suspended trading are not. This may also be a challenge for other related surveys such as that provided by the Federation of Master Builders, which until recently has recorded increased activity.

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