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Number of new homes built in England rising, but not by enough to meet targets

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Thu 25 May 2017

Number of new homes built in England rising, but not by enough to meet targets

More new homes are being built in England but there are still concerns that growth is not fast enough to meet the Government’s target of a million by 2020.

New home starts reached 43,170 in the first quarter of 2017, up 3% from the previous quarter and up 21% year on year, according to the figures published by the Department of Communities and Local Government (DCLG).

The data also shows that starts in the 12 months to March 2017 were 162,880, up 15% compared with the year to March 2016.

Completions at 39,520 were 9% higher quarter on quarter and also 21% higher than the first quarter of 2016 while in the 12 month period they reached 147,960, a rise of 6% compared to the year to March 2016.

Private enterprise new build starts were 4% higher than the previous quarter and completions were 12% higher. Starts by housing associations were 2% quarter on quarter but completions were 5% lower.

All starts are now 152% above the trough in the second quarter of 2009 and 12% below the peak recorded in the first quarter of 2007. All completions are 57% above the trough in the first quarter of 2013 and 18% below the peak in the first quarter of 2007.

Craig Hall, new build manager at the Legal & General Mortgage Club, believes the figures are encouraging but pointed out that more needs to be done to reach the Government target. That target could be added to if the Conservative Party wins the general election on 08 June as it has promised to build another 500,000 homes by 2022.

‘The simple fact is that more houses need to be built across all tenues, shared ownership, private rental, and owner occupier. New build offers the perfect opportunity to restructure our housing market once and for all, by tackling our nation’s chronic housing shortage,’ said Hall.

The figures are published as a new industry poll published by Reuters suggests that Britain’s next Government should loosen planning regulations and encourage more house building if it wants to tame rising prices and make home ownership more affordable.

‘What Governments have failed to do is to tackle capacity in the housebuilding industry and the planning sector. This is a critical issue that is impacting on the ability of developers to deliver more housing to meet pressing demand,’ said Anthony Lee, joint head of residential consulting at BNP Paribas Real Estate UK.

Britain’s biggest builder Barratt said earlier this month that it would build fewer properties in London next year after a decrease of around 20% this year.

‘The next UK government should prioritise policy making with small and medium sized house builders in mind, ensuring that they are encouraged, backed and incentivised to enter the housing market and help put more new homes on UK streets at affordable prices, said Hugo Davies at LendInvest.

According to Kelly Boorman, head of construction at RSM, the home building industry faces a number of challenges. ‘It has taken some time, but new build dwellings starts are edging back up to pre-crash levels. This growth will need to be sustained if the Government is to deliver on its commitments to tackle the current lack of supply in the residential housing market,’ she said.

‘With the average age of first time house buyers being 32 in London and 30 in the rest of the UK and mortgage terms often exceeding 25 years the market place faces challenges in future years in the availability of affordable properties for the elderly,’ she pointed out.

‘The construction industry is also facing a struggle to recruit skilled workers. According to one recent estimate, 400,000 new workers will be needed each year, equivalent to one every 77 seconds, to work on UK housing and infrastructure projects. This will prove to be a real headache for construction businesses, particularly if there are to be curbs placed on recruiting talent from the European Union. Firms may have to be a little more creative in their approach, offering quality training and apprenticeship opportunities and generous packages to attract and retain staff,’ she added.