The number of new homes built in the year to March came at 246,700, according to Savills, a 2% dip on a year ago, but the property agent’s report shows a “starker picture” of completions currently outpacing new planning permission in large parts of England.
In the first quarter of the year, completions fell by 20% compared to the last three months of 2022, says the firm’s English Housing Supply Update Q1, taking its data from issued energy performance certificates.
It says: “The question is now whether the first quarter represents a sign of things to come or merely the worst of the downturn.
“Higher interest rates, build costs and the end to Help to Buy all present demand-side headwinds for the year ahead.”
It adds that around 255,300 new homes gained full planning consent in the year to March, which is 17% below the 2017-19 average, and “well below” the 295,000 new homes a year the UK needs according to the government’s standard method of assessment.
Five out of nine English regions granted planning permission for fewer new homes than are currently being built — tightening supply and potentially seeing fewer new homes being delivered.
The report says the problem is “especially acute” in the North East and the West Midlands, where homes gaining planning permission are 29% and 20% below current completions, respectively.
It adds: “In the South East — which is only building 84% of the homes it needs at present — a further 12% fall in the number of new homes being built may put considerable pressure on existing stock and drive further price inflation.”
Uncertainty over planning policy has contributed to a fall in planning applications, the study says, with applications 14% lower in 2022 than the previous year, according to government data.
It points out: “The uncertainty has also led to a slowing down in adoption of new local plans, preventing new housing allocations from being confirmed.
“Add in a mixed economic picture and a lack of resolution around environmental issues such as nutrient neutrality, and the number of new homes gaining planning permission is unlikely to increase in the near term.”
The survey says that despite the slowdown in housebuilding at the start of the year, “completions are now running ahead of starts, meaning the pipeline of homes under construction will shrink”.
