Builders warn of a drop of 50,000 new homes
- Industry is under scrutiny for failing to meet demand
- The government aims to build 300,000 homes each year, but this seems unrealistic
- Home construction fell in August at the second steepest pace since 2009
Housing market pessimism will deepen amid warnings that 50,000 fewer homes could be built over the next year.
The industry has come under scrutiny for failing to meet demand. And although the government aims to build 300,000 homes in England each year, this target seems unrealistic.
Home construction fell in August at the second steepest pace since 2009, when the “perfect storm” of high interest rates and weaker demand hit.
Pessimism: although the government aims to build 300,000 homes in England each year, this target seems unrealistic
Figures from the Home Builders Federation (HBF) show that 110,598 homes were completed in the first half of 2023, 11 per cent less than in 2022 and 12 per cent less than pre-pandemic levels.
The number of new homes granted planning permission in the three months to June fell 20 percent year-on-year.
Rico Wojtulewicz of the National Federation of Builders (NFB) said: “If things continue, we could see up to 50,000 fewer homes completed in the next 12 months.”
A total of 233,000 new homes were supplied in 2021-22, meaning just 183,000 could be built this year.
Some of the largest builders are cutting targets. Barratt Developments, which normally sells 17,000 new homes a year, expects to build 20 per cent fewer homes in 2024.
“The government’s plan to stop mandatory minimum housing targets and higher interest rates has slowed home sales… a perfect storm,” Wojtulewicz said.
Unfavorable planning rules have also taken their toll, he said. The HBF has accused the Government of adopting an “anti-development approach” and “capitulating to a Nimby lobby”.
Aarin Chiekrie, an analyst at Hargreaves Lansdown, said: “Inflation and rising interest rates have made mortgage affordability difficult, and that is weighing on demand.”