House builders warn 200,000 homes target unachievable

Aaron Morby 8 years ago
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Just 6% of house builders believe that the target of 200,000 homes to be built every year is deliverable.

A survey of over 100 house builders spanning developers of all sizes by estate agent Knight Frank found the industry deeply pessimistic about raising output to the level needed to attack the housing crisis.

The survey also flagged up house builders’ dependence on the Help to Buy scheme.

More than three quarters surveyed said the extension of the scheme will lift development volumes between now and 2020.

More than 40% believed that it will increase the size of schemes undertaken in future.

Most house builders expected build rates will rise by just 10% over the next year. Just a quarter expect an uplift of more than 25% in start volumes.

Grainne Gilmore, Head of UK Research at Knight Frank, said: “The question of whether it is feasible for house builders to plug the housing hole left by the relative lack of government investment remains a primary concern.

“There is no doubt that developers have stepped up activity since the zenith of the financial crisis – official data shows completions in England rose 4.5% over the last year.

“But this still leaves development some way off the levels needed to meet demand across the UK.”

He added: “Our survey suggests however, that development volumes will continue to rise, it is just a question of whether it is going to be enough to meet that 200,000 target.”

The Knight Frank survey shows house builders and developers active in Wales, Scotland and the North East expecting some of the biggest rises, albeit from a low base.

The number of planning permissions for residential units rose most strongly in the Midlands last year.

However, the majority of house builders believe that 200,000 new homes a year is unachievable. Around 30% think that 180,000 is the maximum and only 6% say that exceeding 200,000 on a regular annual basis was achievable.

Gilmore warned: “Next year’s general election throws up some uncertainty about Help to Buy.

“Labour have not commented on their intentions around the equity loan, although they too have criticised the mortgage guarantee.

“Also, finding a suitable unwinding mechanism for the Equity Loan will be paramount in the coming years if a ‘cliff edge’ market distortion is to be avoided in six years’ time.”

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