According to National Statistics, new home building starts have fallen by 3% in the year to March 2018.
Not Good News
For first time buyers in particular, trying to get on the property ladder, this is bad news. The lack of supply is the overriding reason prices have increased. Although due to Brexit and other factors, most areas have seen a small dip in pricing, longer term pressure is upwards, the less houses built, the more upwards the curve is likely to be.
During Q1 2018, the estimate for new starts is 39,350, a drop of 5% on the previous quarter and 8% less than a year earlier. Completions estimated at 38,160 were down 9% on the previous quarter and 4% lower than the year before.
Although the trend has been upwards since the financial crash of 2008, reaching the pre-crash quarterly average of 44,000 new starts, is still a long way off.
Increasing New Home Building
Various experts state we should be building 250,000 to 300,000 new homes a year, almost double the actual volume. Despite post-war austerity and material shortages, more new homes were completed in the late 1940’s and 1950’s than we are managing now. In the 1960s it peaked over 350,000, over 200,000 of which were built by the private sector. If we could do it then, we should be able to do it now.
Experts and commentators give many reasons for the lack of progress in increasing numbers. Politics aside, here are the most commonly seen ones.
- The high cost of building land – the argument is that developers will invest if profits are there
- Planning restrictions – green belt, nimbyism, council inefficiencies etc. are stifling development. It’s much more difficult than in the 1960s when New Towns were established
- Developers “sitting” on land, waiting for prices to increase
- Lack and high cost of skilled labour – construction workers are in demand, successive governments have failed to train enough
- Lack of infrastructure – Large developments will require upgrades to roads, utilities and access to schools and transport etc.
- Finance – post crash cautiousness hitting both developers and buyers
- Government – lack of policy or the wrong policies