New Build House Numbers at a Three Year Low
The number of new homes being built fell to a three-year low during the second quarter of the year as house building activity continued to slow.
Only 37,220 new properties were started during the three months to the end of June, 2% less than during the first quarter and 8% down on a year earlier, according to the Ministry of Housing Communities & Local Government.
In the year to the end of June, construction was started on just 160,640 homes, nearly half the Government’s target for 300,000 new properties to be built per year.
But there was some good news, with the figures showing 45,190 properties were completed in the second quarter, 11% more than in the same period of 2018.
Why is this happening? Uncertainty over Brexit is one major factor, too many potential buyers adopting the "wait and see" approach which has led to weaker demand.
The government also plans to reduce the Help to Buy equity loan scheme benefits which apply to new build properties and to eventually phase out the benefit by 2022. New homes projects take around two years to complete, directly impacting the number of new projects starting due to concerns of future demand.
Also, house building levels continue to be impacted by other issues, including a shortage of labour and building materials, and delays to obtaining planning permission.
The slowdown in house building is bad news for first-time buyers and those who want to trade up the property ladder.
Unless the rate at which homes are built is increased, the situation is likely to get worse, as new build levels fail to keep pace with population growth.
It is estimated that between 240,000 to 340,000 new homes need to be built each year just to keep pace with rising demand.
Although housing starts in the second quarter were 117% above the trough they reached during the financial crisis, they are still below their 2007 peak.
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Council documents locally reveal that in the Canterbury area new build homes are also below the councils expectations, of the fourteen major sites only 7 have started construction due to planning, legal issues and concerns over demand. 1600 homes were expected by the end of the last financial year but only 600 were completed.
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