Lucky escape for Raab - government to miss its new homes target

Former housing minister Dominic Raab, who yesterday left his post after just six months in office, may have had a lucky escape because it appears few in the industry believe his housebuilding targets were achieveable.

Knight Frank has released its annual Housebuilding report, which states that 86 per cent of house builders believe construction of 250,000 additional homes a year is the maximum achievable amount by 2022, falling well short of the government’s 300,000 target.

Just one per cent of respondents, which include more than 100 developers that account for almost three quarters of all newly-built homes across the country each year, think surpassing 300,000 additional homes each year is possible by 2022.

The government is seeking methods to speed up delivery of housing via a review of build out rates currently being conducted by Sir Oliver Letwin with input from the Ministry of Housing, Communities and Local Government.

When asked about the barriers to speeding up development, Knight Frank’s respondents still identified planning as the biggest hurdle, with 39 per cent identifying it as the top issue.

Some 61 per cent plan to increase the number of homes they build during the next 12 months, but that headline figure hides a split between the outlook of larger housebuilders and SMEs. No fewer than 92 per cent of large housebuilders (those constructing over 1,000 homes per year) plan to increase construction starts in the next 12 months, but 57 per cent of small developers intend to decrease activity or leave output unchanged.

When asked for opinions on Brexit, the majority said that that an uncertain economy was the greatest risk to their business, followed by labour availability and access to materials.

Respondents said outer London zones 3-6, the South East and the West Midlands present the greatest opportunities during the next three years.

“Nationwide, housebuilding looks set to increase, underpinned by more evenly distributed house price growth and high levels of employment in regional cities. However, our survey indicates that scepticism prevails among housebuilders over whether it’s possible to deliver 300,000 additional homes a year, and ultimately they will only build what they can sell’ explains David Fenton, Head of Regional Land at Knight Frank.