Spotlight: UK Development

UK Development
 
Meeting the million milestone

4 October 2017, by Savills Research

Figures show that the housebuilding industry has responded to policies aimed at stimulating supply and is on track to deliver the Government’s one million homes pledge

 

The housebuilding industry is on track to deliver one million homes by 2020. According to Energy Performance Certificate records, the number of new homes completed reached 211,000 in the year to June 2017, up 49% in three years.

Developers have increased the number of market homes they deliver by 56% over the same three-year period. Independent of Help to Buy, and excluding affordable housing delivery, the number of new homes absorbed by the market grew from around 70,000 per year between 2009 and 2015 – to 110,000 in 2017. This is a huge increase from past delivery rates.

Thanks to this increased market absorption, the overall number of homes built has carried on growing over the last three years. Affordable housing delivery, predominantly supported by government funding, halved between 2015 and 2016, but this went largely unnoticed in the total housebuilding figures. Instead, housebuilding carried on expanding, and it is the market, principally through people buying houses with no form of support, that has sustained delivery levels.

The certainty of government money going into affordable housing and Help to Buy, supporting demand for new homes, is likely to have been a key factor in building the confidence needed to expand construction capacity. It kickstarted the increase in new homes delivery, which has continued over the last three years.

We expect the number of new homes built in England to hit 210,000 when we see the official figures for 2016/17 in November. Forward indicators suggest we reached this annual level of delivery at the end of 2016, but the last nine months have been a period of stabilisation rather than further rapid growth.

We need a new catalyst if we are to build the 300,000 homes per year that are required in England to ease affordability pressures for home buyers.

FIGURE 1

Housing delivery Net housing completions reached 189,000 in the year to March 2017. The greatest increase in delivery has been from unsupported market sales, which have grown 56% in the last three years

 
Figure 1

Source: Savills Research using DCLG data  Note *2017 is an estimate


Why developers should care about targets

The development industry is still under pressure from the government to deliver more homes. The 2017 Housing White Paper identifies a slow pace of delivery as one of the major difficulties facing the housing market. It proposes a more streamlined approach to planning and giving local authorities increased powers to deliver community infrastructure. But, it also suggests that local planning authorities could have powers to turn down applications from developers who have not shown a strong track record of delivering previously consented sites.

The Government wants to hold developers to account for new home delivery through better, more transparent data and sharper tools to ensure housing with planning permission is built.

Although it is unclear what form these tools will take, this pressure, combined with the new housing delivery test for local authorities, means that it is not enough for the development industry simply to maintain current modes of delivery.

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Chris Buckle

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