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Sun December 16 2018

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Housing reaches new high but growth runs out of steam

16 Nov Latest government numbers show that there were 222,190 new homes added to housing stock in England in the year to 31st March 2018, an increase of just 2.2% over the previous year but 78% above five years ago.

The Net Supply of Housing Statistics numbers – the official measure against which the government’s housing target is set – shows that in 2017/18 more new housing additions hit a 10-year high.

The figure of 222,190 new homes added to England’s housing stock in 2017/18 was nearly as high as the 223,530 of 2007/08, making it the second highest year of the past 31 years.

These figures include conversions and change of use developments. Looking just at new build completions, there were 195,290 new housing units built in 2017/18, an increase of 6.4% on 2016/17’s new build total of 183,570. In the last peak year of 2007/08 there were 200,300 new build completions in England.

The Home Builders Federation (HBF) said that the statistics showed that, with 629,000 new homes in the past three years, the industry was ‘on track to smash’ the target set by government of building a million homes in this parliament. However, the government’s new target of 300,000 new homes a year could be more challenging.

Underpinned by government Help to Buy loans, the new build now accounts for an estimated 15% of overall housing transactions, up from a long-term average of around 8%.

HBF executive chairman Stewart Baseley said: “Today’s numbers are yet another sign that the home building industry is delivering the increases in housing supply the country needs. Whilst the second-hand market remains sluggish amidst wider economic uncertainty, with Help to Buy enabling first-time buyers to purchase new build homes, builders have continued to invest and increase output.

“As well as providing desperately needed new homes, the increases are providing an economic boost across the country. House building sites have created hundreds of thousands of new jobs and provided billions of pounds towards improving local infrastructure and communities.

“Whilst huge progress is being made, government needs to continue to work with all parts of the housing sector to assist them to deliver further increases if we are to hit their 300,000 target.”

Blane Perrotton, managing director of the national property consultancy and surveyors Naismiths, was more pessimistic. He said: “Ever since the Brexit referendum sent an icy chill down the spine of UK construction, Britain’s housebuilders have prided themselves on keeping the home fires burning. As other sectors slowed, the housing crisis kept housebuilders consistently busy. The confirmation that more homes were completed in 2017-18 than at any point in the preceding decade is rightly a badge of honour for a sector that has raised its game in response to huge demand.

“But look more closely and the halo could be slipping. The speed of growth has slowed to a crawl; from 25% in 2014/15 to just 2% last year.

“You don’t need to follow every tortuous twist and resignation of the Brexit saga to identify the culprit for the slowdown. Fragile demand and a lack of developer confidence since the 2016 vote have both slammed on the brakes, even here in the engine room of the construction industry.

“More worrying still is the sharp fall in the number of changes of use made under the new permitted development rights. These new rules, which make it easier to convert existing property into housing, were supposed to be the white knights of home creation.

“On this evidence they are failing to deliver on their promise, and the overwhelming number of new homes created are being built from scratch. All the more reason for the government to inject a shot adrenalin into the planning process. Failure to do so will ensure its target of 300,000 new homes a year remains a pipedream.”

MPU

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