House building hits a decade-high but pace of growth halves in last year

The Government has insisted it is on track to hit its target of delivering 300,000 new homes a year by the mid-2020’s as official figures show house building hit a decade-high last year.

The data shows there were 222,190 new homes delivered during the 2017/2018 financial year, the highest level since the peak of 2007/2008 and up 2% annually.

The additions are made up of 195,290 new-build homes, 29,720 gains from change of use between non-domestic and residential, 4,550 from conversions between houses and flats and 680 other gains. This total was offset by 8,050 demolitions.

James Brokenshire, Housing Secretary, said: “The figures are great news and show another yearly increase in the number of new homes delivered, but we are determined to do more to keep us on track to deliver the homes communities need.

“That’s why we have set out an ambitious package of measures to deliver 300,000 homes a year by the mid-2020’s. This includes over £44bn investment, rewriting the planning rules and scrapping the borrowing cap so councils can deliver a new generation of council housing.”

However, the annual growth rate of supply is down compared with 2016/2017 when supply increased by 15% and has slowed to its lowest level since 2013/2014 when a 10% boost was recorded.

Blane Perrotton, managing director of national property consultancy Naismiths, said: “Ever since the Brexit referendum sent an icy chill down the spine of UK construction, Britain’s house builders have prided themselves on keeping the home fires burning.

“As other sectors slowed, the housing crisis kept house builders 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.”

At Knight Frank, Grainne Gilmore, head of UK residential research, said: “Net additions are still around 26% lower than the Government’s 300,000 annual target.

“The number of Energy Performance Certificates granted to new homes suggest a continued pick-up in activity this year, but separate data which captures information on new homes being started on site, shows a moderation in activity, which could weigh on housing completions in 2020/21.

“There is also a headache for policymakers in London, with net additions in the capital falling by 20% over the year.”

House builders tried to remain positive though.

Stewart Baseley, executive chairman at the Home Builders Federation, said: “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.”

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One Comment

  1. Property Pundit

    Three words: Help To Buy.

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