Housing starts may be 107 per cent above their trough of 2009 but they are still 27 per cent below their peak of 2007
The buy-to-let market has received plenty of negative attention since the changes to stamp duty kicked in and lenders started revisiting their affordability assessments and income coverage ratios, homing in on planned future reductions to the tax relief available to landlord borrowers.
When we turn our attention to the new-build market, however, the direction of travel has quite a different trajectory.
Rather than choking it off, Chancellor George Osborne has been stoking demand for new-builds and we have seen our specialist members take full advantage so far this year. This is also prompting some of our non-specialist firms to ensure they have a presence in new-build too.
There is no doubt national housebuilders have been working flat out for the past two years to open new construction sites around the UK but in some cases this has reached capacity.
This is reflected in the latest housebuilding data for England released by the Department for Communities and Local Government. Annual housing starts in 2015/16 totalled 139,680 – an increase of only 1 per cent from 2014/15. Completions rose by 12 per cent to just short of 140,000 but we can expect these to consolidate too as building starts to plateau.
Delving deeper into the data for the first quarter of 2016, housebuilding starts in England are estimated at 35,530 (seasonally adjusted) – a 3 per cent decrease from Q4 2015 and a 9 per cent decrease from a year earlier.
This will not please the Chancellor as he continues to provide hefty amounts of taxpayers’ funding for schemes such as Help to Buy Equity Loan, now a product in its own right in Greater London where house prices remain the highest in the country. The success of Help to Buy, which has already put 74,000 people into a newly built home, has continued unabated and transformed the fortunes of many national housebuilders.
That said, housing starts will need to move higher if we are to look forward to five more successful years of Help to Buy, taking us to 2021, the year indicated by Osborne for its closure.
While housing starts are 107 per cent above their trough of Q1 2009, they are still 27 per cent below their peak of Q1 2007. Indeed, we have learned not to be complacent in the new-build sector given the ebb and flow of political and economic events, and this is particularly relevant in the run-up to the EU referendum.
‘Statement of intent’
It was pleasing to see the Home Builders Federation recently publish a “statement of intent” on behalf of its larger members, outlining an ambition to deliver further increases in housing supply to meet the Government’s target of building a million homes during this Parliament.
However, it is the HBF’s smaller members, the SME builders – once the backbone of Britain’s housebuilding – that need more support from both the Government and commercial lenders if we are ever to reach that target by the end of this decade.
Andy Frankish is new homes director at Mortgage Advice Bureau