Extending the 'hugely successful' Help to Buy scheme would help builders deliver Government promises to address the housing shortage, say developers.
What’s the latest?
The number of new homes being built soared by 16% in 2017, but the figure remained well below government targets.
A total of 163,250 properties were completed during the year, according to the Ministry of Housing, Communities and Local Government.
But the total was nearly half the government’s new target of having 300,000 properties completed every year, while it is also lower than the estimated 250,000 new homes needed annually to keep pace with demand.
A further 162,180 homes were started in 2017, 5% more than during the previous year.
Looking ahead, Hansen Lu, property economist at Capital Economics, said he expected the rate at which new homes were started to increase by just 4%.
Why is this happening?
The number of properties being built has been steadily increasing since mid-2013, after falling sharply in 2008 when the financial crisis struck.
But despite new build numbers being 70% above the trough they reached in the first quarter of 2013, they are still below the peak of 176,650 recorded in 2007.
Builders report facing a number of issues, such as labour and material shortages, as well as the slow planning permission system, which prevent them from significantly increasing the rate at which homes are built.
Who does it affect?
The ongoing shortage of homes is bad news for first-time buyers and those who want to trade up the property ladder.
As long as demand continues to outstrip supply, there is likely to be significant upward pressure on property prices, exacerbating already stretched affordability.
But there was some good news in the figures, with the majority of completions, at 134,110, being properties in the private sector, which should help to alleviate some of the shortage.
Three-quarters of the homes were also houses, rather than flats, the highest level since 2001/2002.
Sounds interesting. What’s the background?
The figures come as the Home Builders Federation (HBF) claimed the industry was on track to meet the Government’s target of building one million new homes by 2020.
It said policies, such as the Government’s Help to Buy initiative, with the equity loan part of the scheme only applicable to new-build properties, had been central to helping increase new build numbers.
Steve Turner, HBF’s director of communications, labelled it as a 'hugely successful policy', and called on politicians to confirm the future of Help to Buy after 2021, when the equity loan scheme ends.
The Government has also announced £44bn of capital investment to help get ‘building projects started’, including initiatives to speed up the time taken between planning permission being granted and homes being completed.
Top 3 takeaways
- The number of new homes being built soared by 16% in 2017
- A total of 163,250 properties were completed during the year
- But the number was nearly half the Government’s new target of having 300,000 properties completed every year