The Government has been warned today that a radical new housebuilding approach is needed if its new target to build 300,000 homes a year is to be reached.
There have been only six years since the Second World War that more than 300,000 homes a year have been completed in England. The last time it was achieved was the year of the Moon landing – 1969.
The 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 up shift in numbers required to meet the new target without radical change in the way Government supports the industry.
The HFI has set out a three-pronged strategy designed to speed up housebuilding, but warns economic uncertainty means a considerable uplift in the number of homes coming on stream this year is not currently expected.
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. That is a tremendous achievement in itself.
A further increase in building from 160,000 homes to 200,000-250,000 homes a year would be an impressive feat.
The ambition of the Government is to be applauded. But make no mistake 300,000 new homes is a truly tough target. Many more people have been to the moon since 1969, but we haven’t got anywhere near the same level of housebuilding for decades.
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. So much more like a million homes than a lunar landing.
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.
Housing based infrastructure has been creaking at the current rates of delivery and simply isn’t ready to deliver at nearly double current rates. Much more needs to be done, and soon. Government needs to activate the rocket boosters if it has a chance of getting to its new target.”
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 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. A further increase in building from 160,000 homes to 200,000–250,000 homes a year would be impressive but 300,000 was a tough target.
To help accelerate growth, the HFI is calling for housing to be included as its own priority for national infrastructure. At the moment a whole host of topics are included as a priority for infrastructure, but not housing.
It is part of a new three-pronged strategy the Institute says would speed up housebuilding.
1. The Government needs to make housing a specific national infrastructure priority. Right now, a whole host of things are said to be top infrastructure priorities. Yet remarkably housing the nation is not among them. This needs to change. The Government must not only take housing infrastructure seriously, it must be seen to do so.
2. 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.
3. The Government needs to introduce a step-change in financing. To build 300,000 homes will need a lot more money - billions and billions of pounds. 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. Mortgage lenders have a strong appetite to lend yet more needs to be done to help first time buyers. Whether it is housing association, council or market housing, greater attention is required to bring public and private finance together to support housebuilding.