Private housebuilders such as Bourne, Lincolnshire-based Larkfleet Homes, could deliver 150,000 new homes starts a year in England by 2020 according to new research from real estate advisor Savills. This projection is based on larger housebuilders pursuing controlled growth averaging six per cent a year, with similar growth among refinanced medium-sized builders and steady output from smaller builders bolstered by custom build and self-build sector.
This level of growth is dependent on a higher number of planning consents in strong markets where sales rates can increase, but also requires continuation of demand side support such as Help to Buy beyond 2020 to prevent starts tailing off at around 2018.
Without urgent action to release more land and obtain planning consent on it England’s housing shortfall will total one million within 10 years. Britain is facing an annual shortfall of 136,000 new homes across, 100,000 of which is in England. This gap can be reduced substantially, but only by boosting the supply of development land with planning consent in high demand locations and supporting a wider range of developers and delivery models, Savills analysis suggests.
In the year to the end of March 2015, some 140,500 new homes were started in England. Savills estimates that housing starts could reach 205,000 a year by 2020, a 46 per cent uplift. But, they say, this is only achievable if sufficient consented land is made available in the right places, where market conditions can support increased volume and speed of delivery.
Permissions for almost 200,000 homes were granted in England last year, but the rate of new planning consents is not keeping pace with housebuilding in the strongest markets in and around London and in the country’s strongest employment markets. In addition, Savills found that consents in many parts of the South East and east of England are falling well below objectively assessed need.
Susan Emmett, Savills residential research director, said: “Although we have seen an increase in new homes starts over the last two years, progress could come to a halt if housebuilders are not able to replenish their supply of consented land, particularly in the high demand markets of Surrey, Hampshire, Berkshire, Cambridgeshire and parts of Suffolk.”
Savills’ research has also found that policy focus on unlocking the potential to deliver new homes outside the private housebuilder model is also vital. Housing associations, local authorities and large-scale build to rent operators have the potential to deliver a combined total of 55,000 new home starts in England by 2020, more than double current rates of delivery, Savills estimates. Increased availability of skilled labour and materials are also vital.
“Unless bold steps are taken to boost delivery of new homes, we anticipate that the accumulated shortfall in England alone could rise to around a million over the next decade,” said Emmett.
“It is vital that decision makers recognise the importance of releasing substantially more land in the right places. Without this, additional demand will inevitably lead to higher land values, a squeeze on developer margins and a choking off of volume growth.”