Andy Frankish, new homes director at Mortgage Advice Bureau, provides an in-depth analysis of the new-build sector
We can draw both positives and negatives from the second-quarter housebuilding statistics for England, issued last month by the Department for Communities and Local Government.
The good news was that completions in all sectors continued their upward trend with private sector developments up 4 per cent at 26,830, which is 1,000 more homes than in Q1. Put into context, private housebuilding is completing on 7,000 more homes per quarter than when Help to Buy 1 was launched back in April 2013.
However, starts from private developments fell back from 31,900 in Q1 to 28,100. All-sector housing starts in England appear to have settled around 137,000 for the past 12 months, with no sign that will change much over the coming year.
With seasonal adjustments, starts are 94 per cent above the trough of Q1 2009 but 32 per cent below the Q1 2007 peak. Completions are 26 per cent below their Q1 2007 peak. So the problem still lies in the supply. No surprise there.
Shortage of skilled labour and materials, and delays with planning all contribute. I was criticised in last month’s column for complimenting the Government’s action on products such as Help to Buy, which accounted for around 40 per cent of all new-build sales in the past quarter.
I accept that Help to Buy will not in itself increase volume output but it has given the large developers the confidence to go out and invest in land.
The Home Builders Federation has gone on record saying there are around 200,000 new homes a year in planning. However, despite feedback suggesting planning is the best it has been for several years, there are still issues that present very real problems with no easy solutions.
Take the emotional subject of building on greenbelt land. In places such as the South-east, where the need for housing is extreme, certain areas of greenbelt land need to be given planning consent.
The immediate impression most people have of greenbelt is beautiful spaces of pasture and woodland. In reality, some areas in desperate need of regeneration are classed as such. Surely they have to be given consideration for development.
I have said for a number of years that the UK housebuilding industry needs the return of the small SME builder to achieve an increase in starts. Together they can support the large national housebuilders, which have no moral obligation to increase their output, especially if it is to the detriment of their shareholders.
Are the issues with planning holding back SMEs? If so, why can we not make this process more efficient?
I am afraid the biggest issue is that, despite most of the general public understanding the need for more new homes, they do not want them on their own doorstep. There seems to be an automatic tendency to object to anything that may change the landscape in our communities or potentially increase the number of cars in our villages.
Housebuilders are working hard on engaging early with local communities to get support for new developments but there will always be people who object to planning applications.
The big question for housebuilders is how to engage with them and gain their support, rather than have them battle against them.