UK Residential Construction Continues To Lag Behind Need

Recent growth in new construction continues to lag behind need in the UK. The market there is still hampered by lending access issues, which are aggravating the crisis …

Recent growth in new construction continues to lag behind need in the UK. The market there is still hampered by lending access issues, which are aggravating the crisis in housing. In order to fulfill promises of housing development, the new Coalition government must steer a clear transition course to deal with a deficit of one million new homes. See the following article from Property Wire for more on this.

The number of new residential properties built in the UK rose in the first three months of this year to their best level since the second quarter of 2008, new figures show. But industry commentators are warning that they are still way below peak and not nearly enough to avert a housing crisis.

Simon Rubinsohn, Royal Institution of Chartered Surveyors chief economist said starts are currently only running at around 50% of the level achieved at the high water mark of the previous cycle and that most of the recent improvement has come from a turnaround in private sector development with output from housing associations remaining fairly stable.

RICS own research suggests that further increases in output are likely to be relatively modest. ‘The lack of mortgage finance for first time buyers coupled with a shortage of development finance are two key factors holding back a more meaningful recovery in residential construction,’ said Rubinsohn.

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RICS expects housing starts over the course of 2010 to total around 120,000. ‘Although this is some way above last year’s outturn of around 80,000, it compares unfavorably with the number of starts, typically around 170,000, recorded in the middle part of the last decade,’ he added.

Clear guidance on future house building planning policy is urgently needed, according to the Home Builders Federation which says a deepening of ‘an already acute housing crisis’ needs to be avoided.

It says the Coalition agreement document refers to a ‘rapid’ abolition of the Regional Strategies, plans that set out the number of new homes that have to be built in an area, but only commits to reforming the planning system ‘in the longer term’ as the Government moves towards a ‘localism’ based approach.

‘Clearly any gap between the abolition of the Regional Strategies and the introduction of a new planning system poses serious concerns for all those to whom housing matters, including house builders and Local Authorities alike, but also for local communities, home buyers and the many employed in and through house building. There is obvious potential for the dangerous void of guidance to derail the recovery seen in recent months with clear implications both for jobs and for people looking to buy and in need of a home,’ said HBF chairman Stewart Baseley.

‘We urgently need clarity on housing planning policy if the Government is to deliver its pre-election pledge to build more of the homes it recognizes we need. We all expected the regional plans to be scrapped, but we now need direction on how we are to move forward. We have an acute housing crisis in this country, approaching a shortfall of a million new homes. We just cannot afford a period of confusion to reduce house building still further at a time when we are already building at the lowest level for many decades,’ he added.

He also described the proposal to increase Local Authorities’ powers to stop so called garden grabbing as ‘concerning’ as in any areas, Local Authorities face difficult choices in determining where to build necessary new homes. ‘They may choose to grant planning applications for garden sites as it is the only way to supply much needed housing in a manner that is not detrimental to the local character. Building on such sites is often also important for smaller local firms which provide much needed local employment,’ Baseley explained.

He called for a transition plan ‘to bridge the gap between the radically different policies of the last and the current Government. It is absolutely essential if we are to avert a slump in house building that is already at its lowest level since World War Two,’ he added.

This article has been republished from Property Wire. You can also view this article at
Property Wire, an international real estate news site.

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