The Government has been warned that a radical new housebuilding approach is needed if its new target to build 300,000 homes a year is to be reached.
The Housing & Finance Institute, which works with both private and public sector partners to encourage faster housebuilding, says the sector is not confident it can deliver the major shift in numbers required to meet the new target without radical change in the way government supports the industry.
Natalie Elphicke, Chief Executive of The Housing & Finance Institute and a former government Housing Adviser, commented: “The government is on track to meet the million homes ambition set previously. 2017 was one of the strongest years for housebuilding starts and additional housing supply in the last quarter of a century.
“The ambition of the Government is to be applauded. But make no mistake 300,000 new homes is a truly tough target.
“Our discussions with the housebuilding industry in the second half of 2017 found that sentiment continues to be positive about building and growth. The market is seen to be running at a stable level, albeit with a slight downside potential. But the view is very much ‘steady as she goes’ rather than gearing up for a major shift in delivery numbers.
“Following the Government’s Autumn Budget, sentiment remained the same, suggesting that the current higher levels of housebuilding are sustainable but that a giant leap forward is not currently forecast.
The HFI says there are a number of factors that are contributing to caution in the industry including access to skills and materials following Brexit, sluggish wage growth, upside pressures on inflation and interest rates, rising costs of living and consumer affordability. The HFI’s warning is in line with recent reports from the Bank of England indicating that demand for new housing showed signs of softening.
The HFI has set out a three-pronged strategy designed to speed up housebuilding:
- The Government needs to make housing a specific national infrastructure priority.
- The Government needs to continue to support housebuilders and ensure that quality and well as quantity is delivered. A firm focus on modular housing and state of the art manufacturing would boost productivity and help the Government to meet its housing targets while securing quality, consistency and affordability.
- The Government needs to introduce a step-change in financing. Public finance from government and councils is critical, and more could be done to unlock the potential from local authorities, but it is not enough for the scale of investment needed to support 300,000 homes. There is substantial finance capacity in the private finance markets and pensions funds seeking housing assets.
The number of new homes started in 2016/17 was at the highest level recorded since 2008/09. It was the fifth highest year in more than quarter of a century. In England, over 160,000 homes were started, up from over 140,000 the previous year. However, homes completed in England last year sat at 148,000, a smaller increase from the 140,000 homes reported the year before.