New home starts in England up to highest level since 2008

The number of new homes that have started to be built in England has surged to the highest level since 2008, official figures show.

The latest house building data from the Department of Communities and Local Government (DCLG) shows that 164,960 new homes were started in the year to June 2017, up 13% on the previous year, and have increased by more than three quarters since the low in 2009.

More than 153,000 new homes have been completed during the same period, showing an increase of 11% compared with the year before.

‘Building more homes is an absolute priority for this Government. The figures are proof that we are getting Britain building again, with new housing starts reaching record levels since 2009,’ said Housing and Planning Minister Alok Sharma.

‘It’s vital we maintain this momentum to deliver more quality homes in the places that people want to live. Our housing white paper set out an ambitious package of long term reforms to do just that,’ he added.

The figures demonstrate strong growth in house building right across the country, with Gloucestershire, South Derbyshire and South Norfolk amongst the strongest areas in delivering high levels of starts.

An additional £1.4 billion investment was announced for the Government’s affordable housing programme, increasing the total budget to £7.1 billion. Since 2010, almost 333,000 affordable homes have been delivered, including 240,000 affordable homes for rent.

However there is a lot of impatience in the industry that the Housing White Paper seems to be on hold. According to James Allen, head of Walker Crips Alternative Investments, housing supply issues will persist until local authorities have a mandate to build.

‘The new house building figures should be met with cautious optimism even though the sector seems to be in generally good health. The trends for new house build starts and completions show that the market has recovered to pre-crisis levels. There is also significant convergence between the number of starts and completions which implies that there are few projects not being seen through to completion,’ he said.

‘The data is, however, no cause for real celebration as it belies the deeper issue of housing supply. There is a maximum capacity for new builds from the private sector and at around 140,000 or 85% of all new build starts, there is little room to increase activity,’ he pointed out.

‘Housing associations have historically been able to deliver between 20,000 to 30,000 new units per annum so given they are currently producing around 25,000 they will struggle to provide significantly more,’ he explained.

He also pointed out that the Barker Report, which reviewed land use planning in 2006, suggested that there needs to be 209,000 new units per annum in order to keep pace with changing demographics.

‘We have been well short of this figure every year since then. The most obvious way to address this dearth of supply is to give local authorities a mandate to once again build housing. Local authorities currently account for less than 1% of new housing,’ he said.

‘While I do not advocate a return to 1960s type building schemes, a short term, five year plan to allow local authorities to borrow at cheap interest rates in order to rapidly address the housing shortage in target areas should not be considered political dogma. It is a sensible solution to a long term crisis,’ he added.

Murray Smith, managing director of SiteSales Property Group, is concerned that in the housing association sector there were 19% fewer starts. ‘The statistics reflect what we knew, in that completion on projects commenced pre-Brexit would be healthy, while the post-vote hiatus in the industry and an uncertain market has withheld starts in recent quarters,’ he said.

‘Private activity sees no real change or surprises, it is in the housing association sector where concern should lie as it reflects continuing caution. On the face of it, this may look like caution per se but in fact it is caution with a combination of planning inertia and construction cost uncertainty,’ he added.