The number of new build homes that have started to be built has surged to the highest level in almost a decade.
The latest housebuilding data shows that 164,960 new homes were started in the year to June 2017, up 13 per cent on the previous year, and have increased by more than three-quarters since the low in 2009. More than 153,000 new homes have been completed during the same period, showing an increase of 11 per cent compared with the year before.
Housing and Planning Minister Alok Sharma said:
“Building more homes is an absolute priority for this government. These figures are proof that we are getting Britain building again, with new housing starts reaching record levels since 2009.
“It’s vital we maintain this momentum to deliver more quality homes in the places that people want to live. Our housing white paper set out an ambitious package of long-term reforms to do just that.”
The figures demonstrate strong growth in housebuilding right across the country, with Gloucestershire, South Derbyshire and South Norfolk amongst the strongest areas in delivering high levels of starts.
James Allen, head of Walker Crips Alternative Investments, commented:
“The new housebuilding figures should be met with cautious optimism even though the sector seems to be in generally good health. The trends for new housebuild starts and completions show that the market has recovered to pre-crisis levels. There is also significant convergence between the number of starts and completions which implies that there are few projects not being seen through to completion.
“The data is, however, no cause for real celebration as it belies the deeper issue of housing supply. There is a maximum capacity for new builds from the private sector and at c140,000 (85% of all new build starts) there is little room to increase activity. Housing associations have historically been able to deliver between 20,000-30,000 new units per annum so given they are currently producing c25,000 they will struggle to provide significantly more.
“The Barker Report, which reviewed land use planning in 2006, suggested that we need to create 209,000 new units per annum in order to keep pace with changing demographics and we have been well short of this figure every year since then.
“The most obvious way to address this dearth of supply is to give local authorities a mandate to once again build housing. Local authorities currently account for less than 1% of new housing. While I do not advocate a return to 1960s type building schemes, a short term, five year plan to allow local authorities to borrow at cheap interest rates in order to rapidly address the housing shortage in target areas should not be considered political dogma. It is a sensible solution to a long term crisis.”
Murray Smith, managing director of SiteSales Property Group said:
“The statistics reflect what we knew, in that completion on projects commenced pre-Brexit would be healthy, while the post-vote hiatus in the industry and an uncertain market has withheld starts in recent quarters.
“Private activity sees no real change or surprises, it is in the housing association sector (with 19% fewer starts) where concern should lie as it reflects continuing caution. On the face of it, this may look like caution per se but in fact it is caution with a combination of planning inertia and construction cost uncertainty.
“Market activity this autumn will answer a lot of questions and, in turn, impact decisions in regard to the market’s future growth potential.”