Supply of new homes set for further falls

Planning permissions for new houses have dropped sharply.

The fall follows last May’s change in government, and the disarray in planning procedures after Communities Secretary Eric Pickles announced a radical change of policy. However, this has yet to be implemented, with the Localism Bill still on its way through Parliament.

In the third quarter of 2010, planning permissions for new homes were at one of the lowest levels in the last five years, and the second lowest of the past 19 quarters.

Currently the country has a housing shortfall estimated to be a million homes, and last year the number of new homes built was the lowest since 1923.

Homes typically take up to three years to build after planning permission is granted, so the implications of this drop will not be felt for some time.

Household number projections show the need for around 232,000 new homes to be built each year up to 2033. But the total built in 2009/2010 was just 118,000.

Now it looks as though the situation will worse. The New Housing Pipeline report shows that through 2010 there was a steady fall in permissions granted for new homes.

Stewart Baseley, executive chairman of the Home Builders Federation, said: “The report paints a bleak picture and shows how permissions, the lifeblood of housing supply, have plummeted. We already have an acute housing crisis and these figures show there is potential for it to get much worse. The social and economic implications of this would be a disaster for the country.

“The Government cannot afford to let confusion over planning policy reduce further the number of permissions given. It is vital that the Government gets on and implements its new policies.”

Steve Lees, director at SmartNewHomes.com, hit out at housing minister Grant Shapps.

He said: “The fact that the number of new home planning permissions granted nosedived last year will come as little surprise to the industry, which has been hit hard by the abolition of housing targets and confusion over planning law.

“The outlook remains clouded and I wouldn’t expect to see a sharp rise in new home approvals this year, since continued delays to the implementation of Shapps’s localism policy mean the planning system remains in disarray.
 
“Even if localism is successful in increasing new homes development in 2012 and beyond, it will be many years before the industry is able to make any serious dent in the housing shortfall. Shapps is calling for housing market stability, but there needs to be a dramatic increase in supply before it will have any impact on prices.”

The HBF report, compiled by Glenigan, is the first of what will be quarterly monitoring. It will provide a regular and accurate assessment of the situation being faced by developers as local authorities get used to the new planning system.