Despite political demotion, housing delivery is a key issue for planners, politicians and investors. Residential yields are driving interest in mixed use schemes that have been dormant for years and in new products such as PRS (http://www.dentons.com/en/insights/articles/2012/november/12/if-you-build-it-will-they-come).
Going for gold
Three years ago (13 September 2010) the House of Commons Communities and Local Government Committee heard from Eric Pickles, Grant Shapps and Greg Clark on the abolition of the “crazy” Regional Strategies an action described by Shapps as “the greatest favour of getting homes built of any government since the last war“. Building more homes each year than during the previous Government’s tenure would be the “gold standard upon which we shall be judged” he said. There is a forecast 20% increase in new households to 2031 and planning will fail to meet identified needs if it delivers less than 240,000 per year, every year, for the next 20 years. This remains the Government’s current target, by 2016. So where are we now?
Mind the gap
A long way from the Gold Standard – 106,000 completions last year (9% down on the previous year). The 2007 Calcutt Review concluded that the housebuilding industry would have to grow by nearly 5%, compounded, over the next decade to achieve the Government target. The pictures tell the story (see below).
(Prepared by Shelter)
England has a track record of housing reform to head off the social unrest that shadows overcrowding and dissatisfaction with place. Since the announcement of the Government’s Gold Standard for delivering at least 240,000 new homes per year, housing has begun to assume even greater political significance. Scarcity values, the diversion of national wealth to servicing mortgage debt and the restraint on home formation are ultimately a brake on the economy.
We have to double up delivery from today (and achieve an increase of 50% above recent peak delivery). That is a new Southwark delivered (not just consented) every year, or a new Birmingham (numbers-wise) every three. Assuming the private sector can deliver 130,000 homes every year, that still leaves an Exeter, 7 Hampstead Garden Suburbs or 2 Welwyn Garden Cities every year for two decades. Will Nick Boles’ vision of self builders delivering the gap be realised? You can, apparently, shoot him if he is still responsible in 2015.
The next blog on this topic will look at what reforms are needed to genuinely deliver against this volume of unmet need.