It’s certainly true that we are producing less than 100,000 new homes a year when realistic estimates are that 200,000 plus are needed – and that doesn’t take account of the last 10 years when we haven’t hit this target.
A step up in volume is desirable for a number of reasons. Housing plays an important part in our overall carbon output and an ageing housing stock is a stone around the neck of a government seeking to improve energy efficiency, as well as representing an increasing economic burden for homeowners and social housing entities that are required to maintain them.
Perhaps closer to the man in the street’s heart, there are a growing number of households and hence higher property demand, as people choose to live alone or in more widely dispersed family groups.
I see that politicians out to grab a headline have recently made some fairly rabid claims about developers in the new-build sector, essentially suggesting that in some ways they are profiteering by acquiring massive land banks and then failing to develop them, hence ignoring the issues above. At best this is an ill thought through statement.
Developers are retailers and make money by selling houses – I’ve never met one that doesn’t want to up building levels. What undoubtedly has occurred is that in some cases, developers have taken the opportunity to acquire land at lower prices with a view to future development and higher profits in the future- that’s not sinister, its good business.
Let’s not forget that all the national builders actually took massive hits to their balance sheets when the value of their land banks fell post-2007 and this in turn constrained their ability to produce new units while they repaired finances. So ‘land banking’ as a strategy has huge risks that no sane board would consider as a long-term strategy. It’s like playing roulette.
Thankfully, the financial restructuring has now been largely successful and I would expect a related upturn in new units to filter through – particularly with the government support for the sector with various MIG schemes now in place.
If we are looking for a scapegoat, maybe we should consider the supermarket chains that seemingly buy land and not develop it, purely to keep competitors out of town- perhaps we should compel them to release land for housing first. Who’s for a game of Tescopoly?
Richard Sexton is director of business development at e.surv
