One million homes by 2020? are we getting closer?
06 September, 2016
One million homes by 2020… are we getting closer?
The latest house building data (published 25.08.16) shows that 139,030 new homes were completed in the last year (June2015 - 2016) and have continued to build gradually over the last 2 years. However, 'Shelter' commissioned a Capital Economics Analysis and the recent result 'Achieving the Ambition' published almost simultaneously, is critical of the Government's ability to meet their target to build one million homes by 2020, revealing that they will be over 25% short unless there is drastic change, projecting an 8% fall in housebuilding over the next year. Potential reasons for this which we can see from the current market are:
- Larger housebuilders losing confidence post-Brexit (Bovis & Redrow are the latest housebuilders to announce job cuts)
- Investment required in the construction workforce - see article from page 9 of our CIH Bulletin 'Solving the skills and capacity crisis to deliver the UK's future houses'
- Although there may be a large number of new homes being built these are not necessarily 'affordable homes', a great number are being built for investment in the private sector to rent, this is supported by the latest data showing the proportion of home owners has fallen in the last 13 years e.g. in Greater Manchester in 2003 home ownership was at 72.4% and in 2016 this figure is now 57.9%, according to the Resolution Foundation (http://www.resolutionfoundation.org/media/press-releases/home-ownership-struggle-hits-coronation-street/ ).
- As well as increased house prices "incomes simply haven't kept pace with house prices" (Resolution Foundation)
- Our international partners are encountering similar issues, see article from page 6 of our CIH Bulletin - 'How to get 1 million homes, lessons learnt from international partners'
- A level of uncertainty in the planning process means investors are reluctant / cautious to expend resources pursuing planning permissions until the one million homes are assigned to particular sites under the Local Plans
So what are the solutions? - these are a few things
- Unlocking the potential in smaller construction firms - 'Shelter' have suggested a 'Help to Build' programme which would support such firms, working with the public sector. It is suggested that there is more focus on such firms who were forced out of the market following the 2008 crash.
- The Federation of Master Builders call for councils to become "significant" house builders again by lifting the borrowing on local authorities.
- Key reforms to the housebuilding market "Only significant reform of our house-building market will build the homes we need, but with vision and ambition, we are confident that the new government can meet their target and give back hope to a generation struggling with sky high housing costs." (Shelter)
- Giving local communities the powers to force land-owners to make space available for new homes where there is an identified local need
- 'Shelter' suggests that the Government take advantage of historically low interest rates and create a 'Growing Britain Fund' to invest in new homes and infrastructure.
- Reforming the planning process to concentrate more on the provision of affordable homes, making it easier for RP's and Local Authorities e.g. increased understandings by planning teams of what lenders will / will not accept in Section 106 Agreements
- Changing the way we build, see article on page 8 or our CIH Bulletin - 'Institutional investment in modular build'
- Finalisation of adopted Local Plans by local authorities setting out housing priorities - deadline March 2017
This is an area we will be keeping our eye on and will continue to keep updated… watch this space!