“The government set a target of 300,000 new homes a year but weakening demand means that construction is slowing”

“England is building 21 per cent fewer homes than during a peak in 2007 as the government struggles to reach its target of 300,000 homes a year.

Figures from the Ministry of Housing, Communities and Local Government showed that housebuilders started work on 38,730 homes in England on a seasonally adjusted basis in the three months to the end of June. This is down from 48,920 in the first three months of 2007. However, it was 126 per cent higher than a low of 17,120 in the first quarter of 2009, in the depth of the financial crisis.

Conversions — for example, turning an office block into flats — also count toward the 300,000 target. When these are included, the figures show that there were 217,350 “additional dwellings” in England in 2016-17, a ten-year high. However, the number of housing starts for new homes is still declining, suggesting that a higher total figure may not be achieved this year. Compared with the previous quarter, the number of housing starts fell by 3.7 per cent from 40,200 in the three months to March and by 4.1 per cent from a year earlier.

Hansen Lu, of Capital Economics, said that demand was weakening. Analysts believe that buyers are starting to hold back because of uncertainty about what Brexit will do to the economy.

“With starts having fallen in four of the last five quarters, the big picture is that housing construction is on a gentle, downward trajectory,” he added. “We expect builders to slow construction further over the rest of 2018, rather than run the risk of building homes they cannot sell.”

The government figures were contested by property analysts and housebuilding groups, and have been discredited by the UK Statistics Authority, because they are compiled through local planning departments. These have been seen to be less reliable in recent years because the planners do not always receive information from all builders in their area.”

Source: Times, paywall

One thought on ““The government set a target of 300,000 new homes a year but weakening demand means that construction is slowing”

  1. Demand is weakening only partly because of the state of the pre-Brexit economy…

    The main cause of a decline in housing demand is the extortionate cost of housing – and that is simply the law of supply and demand, with the big-6 house-builders having cornered the market and land-banked all the available building land.

    These land-banks have enabled the developers to rack up book profits simply by gaining Planning Permission and increasing the market value of their land, an increase that they can immediately book as profit – this enabling the senior management to take home eye watering bonuses, with many of the annual bonuses to Chief Executives exceeding the amount of money most people in this country make in an entire lifetime of work.

    Unfortunately, when demand is weak, the last thing that the big house-builders will want is to increase supply and damage their lucrative profit margins. Their land-bank values make them extremely vulnerable to a drop in land value which would precipitate huge losses – so you can bet that they will do anything to stop this happening, including moans and groans like this making excuses for their drops in profit whilst blaming it on everyone else other than their own earlier greed.

    Like

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