Recent official data reveals a significant leap in housebuilding during Q2 2023 in England. Specifically, the number of new construction projects rose to 67,600 between April and June, marking a staggering 75% growth from the previous quarter. When compared to the same period in 2022, the increase is still noteworthy at one-third.
The reason for this sudden surge? It appears developers were racing against the clock.
The Impending Energy Regulations: A Quick Escape?
England saw new building regulations take effect on June 15, focusing on energy performance and provisions for electric vehicle charging points. Here’s the catch: the new rules didn’t apply to projects that commenced before the stipulated date. This loophole presented builders with an incentive to initiate their projects sooner rather than later to avoid the additional costs associated with compliance.
The government attributed the “unusually high peak in starts” to this very reason. Many developers seem to have adjusted their timelines to sidestep the new, potentially costly standards.
A Solution to England’s Housing Crisis? Not So Fast
While the numbers sound impressive, industry analysts sound a note of caution. The spike in housebuilding does not mean England’s housing woes are over. In fact, new constructions have consistently fallen short of the government’s annual target of 300,000 homes for the past decade and a half, as reported by the House of Commons Library.
James Barton, a leading voice at Knight Frank property consultancy, weighed in, suggesting that the current surge does little to “ease the housing shortage”. He attributed this shortcoming to a chronic lack of housing supply over the years, highlighting challenges for first-time buyers and young families looking to upgrade.
Moreover, Myron Jobson from Interactive Investor, raised another point: what about the quality of these hurriedly constructed homes? Jobson also emphasized that affordability remains a major obstacle for many. Despite a rising number of new homes, many still live in unsuitable accommodations.
What the Data Says About Completed Projects
While the number of projects initiated saw a boom, completed dwellings didn’t share the same fate. Between April and June, there was a decline of 12% in completed houses year-on-year, totaling 39,600. This number is also 18% lower than the peak observed in March 2021.
Promises, Plans, and Political Stances
Housing has long been a hot-button issue in England. Reflecting on the 2019 election manifestos, all primary political parties pledged to amplify housing supply. Yet, challenges persist.
Recent attempts to catalyze the construction process include government efforts to ease water pollution rules. However, these were swiftly rebuffed in the House of Lords. Labour officials, on the other hand, have explored compelling landowners to relinquish plots below market prices, aiming to trim construction costs.
The Ripple Effects on Prices and Rents
The demand and supply imbalance in housing has maintained buoyant house prices. Alongside this, mortgage costs have ascended drastically within a year. Notably, the housing shortage has driven UK rental prices to record growth rates as of August.