Associate Director - New Homes Sales
A surge in the number of new residential properties being built in the UK is helping to ease the housing shortage. New-build registrations have reached their highest level since before the global financial meltdown, according to the National House Building Council.
While the year got off to a tentative start, there has been a sharp rise in activity by UK housebuilders in the third quarter of 2018, with construction firms registering the highest number of new homes for more than a decade.
The National House Building Council (NHBC) said a total of 43,578 new-build homes were registered between July and September. This is the most of any quarter since 2007 and up 15% on the same period last year.
There were 33,520 new homes registered in the private sector, a rise of 16%, and another 10,058 in the affordable sector, up by 12%.
The NHBC’s registration figures, which represent homes to be built in the coming months, are a good indicator of the UK’s new homes market overall as they’re taken from builders who are responsible for around 80% of homes constructed.
NHBC chief executive Steve Wood says: “The upturn in registrations over recent months is good news for the industry and shows that there remains a strong demand for high-quality new homes in many parts of the UK.”
New homes picture across the regions
Seven out of 12 regions across the UK recorded growth, spearheaded by London which has seen new home registrations soar 141% to 6,007. The NHBC puts much of the rise down to several large developments being registered by housing associations and investors focused on the private rental sector.
Yorkshire and the Humber recorded a 39% rise, while the South West also performed strongly, with new-build registrations up by 34%. Jamie Snell, New Homes Manager at Strutt & Parker Exeter, says growth in the South West is reflective of the relatively upbeat mood of local housebuilders.
“You have the small regional developers, and then you have big PLCs who are still buying up land at a rate of knots,” he explains. “In the South West, most authorities – like other places – are behind on housing targets so are actively trying to incentivise developers to meet government quotas. The bulk of the activity is happening with developers who deal with lower value property sub-£500,000, so those who specialise in this market still feel very confident at the moment.”
The majority of buyers for new-build homes in Devon, Somerset and Cornwall are in their 50s or older and looking to downsize to move closer to family, he adds.
Recovery after ‘Beast from the East’
Although there was a 14% drop in registrations in the first three months of 2018, this can partly be attributed to the exceptionally bad weather at the start of the year when the Beast from the East severely hampered progress on building sites across the country.
This was coupled with the ongoing uncertainty surrounding Brexit and a shortage of skills across the house-building industry, with many foreign labourers returning home to eastern Europe. Despite these challenges in the first quarter of the year, however, longer-term trends point to continued growth in new home registrations, with industry confidence high.
Outlook for new-builds
The latest figures from the NHBC are seen as a step in the right direction to increasing housing supply as the Government strives to meet its target to deliver 300,000 new homes a year by 2022.
It has put in place a raft of measures intended to speed up the house-building process, including the £1.3 billion Land Assembly Fund which will be used to acquire land and prepare it for the market, making it less risky for developers to invest in.
From April 2021, a new Help to Buy equity loan scheme will run for two years, which could create “a boom in sales” according to Snell. The revised scheme will only be open to first-time buyers purchasing homes within new regional property price caps.
The Government has also committed an extra £500 million to the Housing Infrastructure Fund, which Chancellor Philip Hammond says will unlock 650,000 new homes.
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