New home building not increasing at rate needed in England
More needs to be done to boost house building in the UK, according to the industry, with the latest official figures showing that the number of new build starts has fallen.
In the second quarter of 2018 new build starts in England fell by 4% quarter on quarter and were also down 4% compared with the same period in 2017, the data published by the Ministry of Housing, Communities and Local Government (MHCLG) shows.
However, completions are increasing, up by 7% in the second quarter of 2018 compared with the same quarter in 2017 and were 1% higher than a year ago.
The figures also reveal that year on year new building starts fell by 3% in the 12 months to June 2018 compared with the year to June 2017, but completions increased by 5%.
The data shows that in terms of the wider picture, starts are now 126% above the trough in the first quarter of 2009 but 21% below the peak in the first quarter of 2007 while completions are 62% above the trough in the first quarter of 2013 and 16% below the peak of the first quarter of 2007.
The figures show that currently there is no boost to home building, despite Government targets being set, according to Shaun Church, director at Private Finance. ‘The figures shows these ambitions are falling flat. While completions may be up, new build starts are down on both a quarterly and annual basis, suggesting the momentum to build more homes and tackle the UK’s supply crisis is waning,’ he said.
‘Despite being the typical home for a first time buyer, flats now account for just 20% of all new builds, compared to 50% 10 years ago. While lack of supply is the most dominant force pushing house prices to beyond affordable limits, we also need to ensure we’re building the right types of home to match the demands of the market,’ he pointed out.
‘Although first time buyers are benefiting from stamp duty exemptions and mortgage rates at incredibly affordable levels, if we fail to address the UK’s chronic housing supply issues, affordability concerns will continue to prevent many from joining the housing ladder,’ he added.
Kate Davies, executive director of the Intermediary Mortgage Lenders Association (IMLA), believes there could be problems ahead for first time buyers when the Government’s flagship Help to Buy scheme comes to an end in 2021.
‘The market has clearly been influenced by the Government’s Help to Buy equity loan scheme, which has helped over 170,000 households into home ownership to date. Whilst Help to Buy may not have been intended to become a permanent fixture to the UK housing market, it has become a very important element of business for builders, lenders and prospective home owners,’ she said.
‘It is therefore very important that the Government clarifies what it intends do when the scheduled funding of Help to Buy ceases in 2021, in order to avoid the risk of market disruption,’ she pointed out.
‘If the scheme is to be maintained but in an amended form, participants will need maximum notice of this in order to plan ahead so that construction and lending can continue smoothly. If the scheme is not to be continued, the Government will presumably announce alternative measures to address the housing shortage, as promised in its February 2017 White Paper,’ she explained.
‘With the Autumn Budget on the horizon, the IMLA would welcome confirmation that the Government will continue to its support of first time buyers post-2021 and also ensure that the whole housing market, public and private sectors, continues to be supported,’ she added.