RSM finds housing crisis remains despite increase in new builds

14 June 2017 Consultancy.uk

England remains in the grip of a housing crisis, in spite of new research from RSM suggesting improvement, with the shortage becoming especially pronounced in London. While the number of new homes built across England has increased, the number is still well below what is required. Pressure groups have unexpectedly been joined by businesses, in their efforts to lobby the Government and local authorities to put an end to the crisis.

Shortages of affordable homes have reached crisis levels across the UK, particularly in the capital, London, where the situation has become so chronic that alongside traditional pressure groups, even business groups have begun to campaign for the government, and local government, to change policy and improve housing conditions for their staff. One of the major campaigns is the Fifty Thousand Homes campaign that aims to build 50,000 new homes, per year, in London.

The latest research, from professional services firm RSM, into the number of new starts for houses in England, shows that for the first quarter of 2017 home-building has increased compared with recent years. An estimated 43,170 new starts were engaged in that time, 21% higher than the same period last year. The increase means that new housing additions are now 152% above that of the low-point in 2009, and around 12% below the most recent peak in 2007. The vast majority of the latest builds were owned by the private sector, at 85%, while housing associations accounted for 15% of new builds, and cash-strapped local authorities flagged far behind, beginning to build just 1% of new homes – meaning while production continued to rise, the majority of these would do little to address the lack of affordable housing.

RSM finds housing crisis remains  despite increase in new builds

In the period preceding the global financial crisis, the sector had seen a relatively stable period of new starts, at around 44,000 per quarter from 2004 to late 2007. However, recent government research from the Government notes that the current increase is far under what is needed to meet population growth figures and the considerable deficit built up during the low period – with a target of around 225,000 to 275,000 or more homes per year in England alone.

The market also faces a number other challenges, with young people finding it increasingly difficult to afford housing – while the number of builders required to build the new stock, around 400,000 per year, are currently not available. With Britain’s divorce from the European Union remaining an unknown quantity meanwhile, the potential for a “Hard Brexit” which ends freedom of movement from the continent is still a real prospect, a key route to access new builders is likely to be cut off in the not too distant future, as the government aim to cut net migration by tens of thousands.

Remarking on the latest figures, Kelly Boorman, Head of Construction at RSM, said, “It has taken some time, but new build dwellings starts are edging back up to pre-crash levels. This growth will need to be sustained if the government is to deliver on its commitments to tackle the current lack of supply in the residential housing market."

He added that, to meet the number of builders required to build housing for the future, “Firms may have to be a little more creative in their approach, offering quality training and apprenticeship opportunities and generous packages to attract and retain staff.”

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