Mixed housebuilding picture prompts call for government stimulus

Releasing figures for August 2016, the Office for National Statistics (ONS) cautioned against reading too much into a monthly total new housing decrease – which was down by 1.3% compared with July and saw falls in both public and private new housing of 2.1% and 1.2% respectively.

Instead, it pointed to an increase of 7.9% in total new housing compared with August 2015 – the ninth consecutive period of year-on-year growth. The ONS also said that broader indicators suggested flat demand for housing in August, with UK property transactions statistics showing little change from July and strength in pricing.

Despite this, Jon White, UK managing director of the global construction consultancy Turner & Townsend, said the monthly figures serve as “a useful reality check for anyone tempted into complacency by the construction sector’s initial resilience”.

“The construction industry is famously cyclical and well used to responding to shocks. So far it has taken the referendum result in its stride, but with Brexit set to be a lengthy process rather than an event, there is a long way to go yet,” he said.

Chief executive of Rentplus Richard Connolly welcomed the 7.9% annual increase but said the newly-announced measures by central government to provide further stimulus to housebuilding are crucial. “It’s important that these plans translate into real outcomes and help provide more people with secure housing options – this is the key to building vibrant communities,” he said.

In August, a private housing increase of 9.4% was offset slightly by a fall in public new housing. There have now been 41 consecutive periods of year-on-year growth in private new housing, while public new housing has seen a run of 16 periods of contraction.

Connolly said this trend “brings to the fore the very important question of whether there are enough affordable housing options available in the UK”.

“The existing affordable housing sector cannot meet demand on its own, due to the scale of the issue, and now is the time to deploy a range of solutions to get the UK plc on track to resolving the housing crisis.”

Rentplus works with housing associations to help aspiring home owners buy properties through affordable rents and a 10% gifted deposit. It has a pipeline of 9,000 homes across the country.

“The government has been indicating that it will take a more flexible approach to affordable housing tenures in future and, in particular, has indicated a broadening of its Starter Homes policy. There is definitely room in the market for innovative affordable housing models, particularly those that bring institutional investment to back affordable housing delivery and provide flexible tenures to help get people to the stage where they can buy their own home,” added Connolly.