Housing approvals fail to keep pace with starts

The number of new homes being given planning permission is not keeping pace with starts, which are rising at record levels.

Glenigan’s New Housing Pipeline Q2 2018 report for the Home Builders Federation shows that the number of units approved during Q2 2018 was 19% down on the first three months of this year and 12% on the same period a year ago.

Private housing approvals fell by 11% year-on-year, while social housing approvals crashed 29%. The falls also affected most of the country.

The biggest drop was in the North East, where approvals slumped 54% on a year ago. Unit approvals also fell sharply lower in the North West, West Midlands, London, East of England and Scotland, dropping 18%, 24%, 18%, 23% and 26% respectively.

Home Builders Federation (HBF) chief executive Stewart Baseley said: “If we are to get to 300,000 homes a year, we need to see consistently high levels of permissions being granted, and then crucially, processed efficiently.”

Starts leap

While approvals sag, separate data from the National House-Building Council shows that starts were made on 43,500 new homes in Q3 2018. This figure is up by 15% on the same period a year earlier and is the largest quarterly total for 11 years.

NHBC chief executive Steve Wood said: “The upturn in registrations over recent months is good news for the industry and shows that there remains a strong demand for high quality new homes in many parts of the UK.”

This rise was boosted by a surge of applications in London, where starts had dwindled to just 2,492 a year ago as house prices slumped.

In the latest period, a spurt of buy-to-let developments and social housing projects pushed the latest total in London up 141% to 6,007 starts and NHBC remains circumspect about growth prospects.

"On a broader front, the industry remains cautious in the short-run until the economic impact of Brexit is clearer,” added Mr Wood.

Help to Buy extended but ends in five years

The HBF ascribed the drop in approvals as partly due to uncertainty over the future of Help to Buy. HtB was due to end in 2021 when many schemes entering the planning system would be due to start on site.

In the recent budget, the government extended HtB by two years to 2023, but it will only be offered to first time buyers and on houses with a market value up to new regional property price caps.

These caps will be set at 1.5 times the current forecast regional average price for a first time buyer, up to a maximum of £600,000 in London.

The HBF said it was “very pleased” with the extension of HtB but other commentators were less positive.

Russell Gardner, Head of Real Estate at EY, said: “With housing stubbornly remaining near the top of the public’s list of concerns, we saw the Chancellor offer a few tricks and treats but no magic spell to make the crisis disappear. The measures announced, while positive, unfortunately will not, individually or collectively, solve one of the most pressing problems faced by the country.”