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New homes not hitting Govt targets

Catherine Deshayes

The Government's target of three million new homes by 2020 is looking increasingly unobtainable, with the news that less than 100,000 new homes will be built next year, which is half the amount needed to hit the target...

The Royal Institution of Chartered Surveyors' (RICS) UK Construction Market Survey has found that the targets are now looking impossible to obtain, what with the downturn in the construction industry sending growth in private housing workloads to a record low.

So far this year 66,220 new homes have been built - with a fall below 25,000 per quarter likely by the end of the year. RICS claim that 200,000 a year must be built to hit the targets.

Even the major housing associations do not believe that the Government figures are reachable without significant help by the authorities. The construction industry is currently on its knees with many firms having stopped trading and many on the verge of bankruptcy. To rebuild what was once a vibrant sector in time for the major increase in new house numbers is just not possible.

The National Housing Federation (NHF) believes that a figure nearer to 1.6 million is a lot more practical and within reach, but two million by 2016 and three million by 2020 is way out of reach at the moment unless things change dramatically.

The NHF believe that is would take an extra nine years to hit the current target meaning a target date of nearer 2029.

The RICS survey shows overall construction workloads declined at their fastest pace on record with 38 per cent more chartered surveyors reporting a fall than a rise.

Some 41 per cent of RICS members expect workloads to fall rather than rise over the coming twelve months as financial constraints continue to bite.

Following significant declines over the past two quarters, private housing sector workloads have now plummeted yet again this week, with 60 per cent more surveyors reporting a fall than a rise.

For the first time, the survey also showed that construction workloads across all sectors are now in decline with private industrial and infrastructure (the only two sectors still recording positive net balances last quarter) now in negative territory.

Oliver Gilmartin, RICS Senior Economist, said, "With finance for projects becoming increasingly difficult to obtain, the government's ambitious target of two million new houses a year by 2016 is likely to fall well short.

"At current levels of production the number of new homes built will fall below 100,000 in the coming year."

"As well as hitting home building, the credit crunch is also making larger public projects more difficult to finance, the survey found, meaning delays and scaling back of developments.

"The outlook for the construction industry is extremely bleak with the previously strong infrastructure sector now unlikely to step in as the downturn in property markets resonates.

"A rapid solution to the log jam in credit markets is necessary to limit the severity of the current downturn which is starting to affect the country's infrastructure," added Mr Gilmartin.

A spokesperson for the Department for Communities and Local Government, admitted the market conditions are "currently difficult for housebuilders" and said measures have been put in place to support the industry.

"We are continuing to maintain our focus on delivering more affordable homes. Backed up with £8 billion investment, it is encouraging to see a 13 per cent increase in the number of social homes new orders," he said.

"It's important to recognise that a legacy of housing under-supply and our ageing and growing population mean the conditions remain for a healthy housing market over the medium to long term, underpinned by historically low unemployment and low interest rates.

"Our house building targets are long-term and we remain absolutely committed to increasing supply to respond to the long-term demand for homes from young families and first time buyers, whilst acknowledging the challenges."

Picture by David Silverline