Housebuilding rates need ‘step change’, especially in London, says NAO

19 Jan 17

Housebuilding needs to “increase across the country”, the National Audit Office has said.

“The need for housing in England in recent years has grown faster than its supply,” said an NAO’s report issued today. This notes that, while projections show there will be 227,000 households created in England each year between 2011 and 2021, only 166,000 extra homes a year have been built over the past 10 years.

The NAO said that the mismatch is particularly acute in London, and argued a “step change” in the rate of homebuilding was required in the capital.

The report, Housing in England: Overview, examines the housing market, broad policy in this area and the government’s housing strategy.

It questions whether the government’s target of delivering a million new homes – both new builds and conversions – by 2020 will be sufficient to meet need. This ambition would require an additional 174,000 homes a year, which is not a substantial increase on the current rate but it is well below the forecast number of new households.

The government intends to publish a white paper on housing this year.

The NAO found that housing has become more affordable for existing homeowners, but less so for first-time buyers now than it was in the 1990s. Social rents have risen faster than wages, as have private rents in London, and homelessness increased over the past five years.

Government housing policies could conflict with each other, the watchdog reported. For example, the government cut the rents that housing associations and local authorities could charge; this made it harder for housing associations to finance new homes, conflicting with the objective to provide one million new homes by 2020.

An unknown quantity was how Brexit could affect the government’s ability to meet its housing objectives.

The report made it clear that the housing shortage was the result of long-term trends. It noted that an average of 144,000 new homes were completed every year between 2001 and 2010 – 100,000 fewer than in the 1970s.

“Public sector housebuilding has fallen and the number of homes added by the private sector has been vulnerable to both economic recessions and the cost of finance to potential homeowners,” said the report.

NAO head Amyas Morse said: “The need for housing in England has in recent years grown faster than its supply, and housebuilding needs to increase across the country.

“The government has responded to this by putting in place a range of policies to increase housing supply and home ownership. Central to this is an ambition to increase the supply of housing by one million homes by 2020, largely through support to private housebuilders. Delivery of this target will not require a substantial increase in current levels of housebuilding.”

Meg Hillier, the chair of the Public Accounts Committee, said: “There is a chronic shortage of affordable housing in England from decades of housebuilding failing to keep up with demand; and from soaring rents and house prices, particularly in London.

“The government has unveiled a raft of initiatives but it is by no means clear yet that these will deliver the number of new homes we need.”

A spokesman for Department for Communities & Local Government said: “Our upcoming housing white paper will clearly set out how we plan to build the homes this country needs.”

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