The UK’s property sector is bracing for impact as new data reveals a dramatic slowdown in business creation, with wider economic turbulence threatening to destabilise even the most resilient industries.
According to Cynergy Bank’s newly released Business Births and Deaths Index, based on the latest ONS data, 2024 saw new company formations fall to 306,995 – the lowest since 2017.
At the same time, the average turnover of failing businesses hit a record high, signalling that even established firms are buckling under mounting financial pressures.
But despite the broader economic gloom, the real estate sector has emerged as an unexpected pocket of resilience.
SHOW OF STRENGTH
With a Business Health Score of 1.30 – indicating more businesses are being created than closed – property-related enterprises continue to show strength. However, industry experts warn that this could be a temporary reprieve.
The slowdown in business creation is particularly alarming for the property market, as fewer new companies often mean reduced demand for commercial spaces, office rentals and development projects.
With high borrowing costs and lingering inflationary pressures, the commercial real estate sector may soon feel the ripple effects of wider economic instability.
REGIONAL DIVIDE
Regionally, London remains a powerhouse, with a Business Health Score of 1.12 – outperforming the national average of 1.03.
However, the picture is far bleaker in the East Midlands and Wales, where business closures outpace new formations, scoring 0.94 and 0.95 respectively. This disparity threatens to strengthen regional inequalities, with property investment likely to concentrate even further in the capital while other areas struggle.
UNDER PRESSURE
The employment outlook is equally concerning. Job creation through new businesses saw a net gain of just 13,754 in 2024 – a stark contrast to the 348,845 net jobs created in 2017.
For the property sector, this weak employment growth could suppress housing demand, slow rental market activity and limit the expansion of commercial real estate.
Nick Fahy, Chief Executive of Cynergy Bank, says: “These figures present a sobering picture of the UK business environment. The National Insurance increase looming in April adds further uncertainty, making it difficult to envision a near-term recovery.
“That said, real estate remains one of the few sectors showing resilience. At Cynergy Bank, we’re committed to supporting businesses – both in property and beyond – with tailored financial solutions and expert guidance to navigate these challenging times.”
