Restraints on private housing output will place further pressure on the housing market in Southern England, according to FPD Savills’ latest Residential Research Bulletin.
The report claims the Planning Policy Guidance Note 3, issued in 1998 by the Government, which switched the building of new homes away from greenfield to brownfield sites is the problem.
It has resulted in greenfield house building falling from 40% of the total, to 33%, and a target of 60% brownfield building being met in 2001.
But the report notes, brownfield building is more time-consuming and cash intensive. The turnover of the top 14 housebuilders increased by 140% in the last five years, but the capital employed has more than doubled. This has acted as a drag on housing output.
Richard Donnell, author of the report and head of residential research at FPD Savills, said: ‘It is all very well setting targets, but house builders do not build for targets, they build for their shareholders. The fallacy that builders are deliberately res-tricting supply is often trotted out, but developers do not control the market that much. Low house building output looks likely to continue in the short term.’
He added: ‘Historically it was the local councils who provided for key worker homes. The whole sector has been forced to change and it is now the housing associations that are bridging the gap.’