The Ministry for Housing, Communities and Local Government (MHCLG) recently published its latest data into new housing supply in the UK.
The stats revealed some stark truths about the realities of housebuilding and the challenges facing the industry on its road to building enough homes for future generations.
In some ways, the statistics are alarming. Between April 2019 and March 2020 – the most recent annual overview – just 243,770 new dwellings were completed. This is a far reach from the 300,000-home target that the government pledged to achieve and it is unlikely this can be written off as purely a casualty of the coronavirus crisis.
While there may well have been disruption to supply chains at the start of 2020, it is hard to say whether that alone is the cause of the 56,230 home shortfall. Either way it is clear that more will need to be done to increase these figures and government will be hoping that its new planning bill will go some way to speeding up the designation of land for housing development.
More recently, however, it seems that activity has jumped. According to the data, the first three months of 2021 saw a significant uplift to the number of properties due to be built. In fact, there was a 7 per cent increase compared to Q4 2020 and the overall figure is also the highest it has been since the first quarter of 2007. In real terms, that means 47,010 new dwellings are underway.
Completion figures are also looking promising. Nearly 50,000 properties were finished in Q1 2021 – a 4 per cent increase on the three months prior. Again, this is an unprecedented figure and represents the largest quarterly result since MHCLG began its seasonally adjusted data series in 2000.
The difference in performance between the 2019 – 2020 period and the beginning of 2021 is significant and can tell us a lot about the way the market has responded to recent policy changes – such as the introduction of the government’s stamp duty holiday.
With buyer incentives in place, there was a clear motivation to ready homes in time for buyers wanting to cash in on the potential £15,000 in tax savings. Rising house prices may also have encouraged activity, with housebuilders wishing to sell at a premium to counteract the challenge of rising material costs, caused by growing inflation rates in the wake of the pandemic.
No matter the exact reason behind the push to build, together these factors will naturally have skewed the figures and have contributed to the remarkable figures we saw in Q1 2021.
The question now is what comes next. We will not see the Q2 2021 housing supply statistics for some time yet, but for the sake of younger generations, let us hope that the results remain positive.
As part of its levelling up agenda, the UK needs to significantly boost its overall housing supply. Without it, there’s a real risk that house price increases could continue at unsustainable levels, further pushing homeownership out of reach for future generations (that can neither save enough towards a deposit or pass current mortgage affordability tests).
For now, remaining optimistic is the best route. Housebuilders should feel spurred on by government support for the sector and mortgage lenders can also play a part by continuing to drive product innovation and finding new ways to support aspiring homeowners onto the ladder.
Legal & General Mortgage Club head of lender relationships Danny Belton
