Housing targets v housing delivery
Last week, some 50 Conservative MPs - including eight former cabinet ministers - signed an amendment to the Levelling-Up and Regeneration Bill that would scrap mandatory housing targets. The vote on the bill that was scheduled for last Monday “may slip” but is still expected before Christmas.
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It seems fitting that the row coincided with the release of the latest tranche of official data on housing delivery, which give the most accurate view as to how delivery compares to existing targets. As widely expected, the numbers show we are still falling short of meeting the government’s ambition to grow housing stock by 300,000 homes a year.
In total, 232,820 net additional dwellings were added to England’s housing stock in the year to March 2022, the data from the Department of Levelling Up, Housing and Communities (DLUHC) shows. That represented a 10% rebound from the pandemic-affected low last year, but not quite back to the pre-Covid peak of 243,000.
New build completions, at 210,070, made up 90% of the overall delivery figure on the back of exceptionally strong demand for new homes post-pandemic. The remaining 10% were made up from conversions and change of use, including office to residential.
Changes in the level of net additional dwellings between 2020-21 and 2021-22 also varied across England, increasing in 198 out of 309 authorities. The geographic spread of increases and decreases is mixed. In London, 21 out of 33 London Boroughs experienced an increase, led by Newham, Brent and Tower Hamlets.
It’s hard to see how housebuilding will increase in line with demand at a local level without those enforceable targets.
High point in delivery?
That’s especially true given this year’s figures are likely to represent a high point in the delivery of new homes. Housebuilders are already reporting slower sales rates, in line with the wider housing market.
Combine this with fewer new consents making their way through a sluggish and under resourced planning system, still elevated build costs, a tight land market and the end of Help to Buy, and all signs point to housing delivery being lower during 2023.
At a time when the country needs new, high-quality homes more than ever, policy-makers’ focus should be on implementing reforms to the planning system, and on finding ways to make it easier for housebuilders to bring forward land for development.
Land pricing
Around half the respondents to our latest survey of SME and volume homebuilders suggested start volumes would decrease in Q4 as the more challenging economic backdrop reduces the pool of potential buyers.
Land values have so far held relatively steady, supported by an ongoing scarcity of sites and continued demand across a wide variety of use classes and tenures. However, after a period of strength, the market faces more downward pressures.
House prices have started to slow, build costs remain elevated, the cost of debt is increasing, and new reservations through Help to Buy have ended. In addition, higher interest rates may lead to the release of more development land.