More land needs to be released for new homes in the UK to meet demand
A rapid expansion of the house building industry has the UK on track to deliver the Government’s target of one million new homes by 2020, but more are needed, according to a new analysis.
Indeed, an additional 100,000 homes are needed each year if the new supply is to have any effect on housing affordability and to boost volumes and improve affordability more land needs to be released in the areas of greatest need, including green belt swaps, says the report from international real estate adviser Savills.
It explains that new homes volumes are up almost 50% on three years ago, meaning that new housing supply is almost meeting demand across most of the UK. However, London and South East regions are bearing the brunt of the shortfall, accounting for 104,000 of the 2015/2016 total, which puts great pressure on affordability. Only a fifth of households can afford to buy the average new home in these regions.
‘Policymakers must take this shortfall in the south east of England seriously if we are to finish the job of solving the housing crisis. Many more new homes are needed at price points that are affordable to the many, and across a range of tenures, if affordability pressures are to be eased,’ said Chris Buckle, director of Savills residential research.
New homes need to be priced as a mass market product to ensure high sales rates, the report says. Increased land release in areas of high housing demand would reduce competition for development sites, leading to lower land values and enabling new homes to be sold at lower price points. If there were more land on the market, land owners may need to realign expectations on the value of land, Savills argues, though that value will still need to be high enough to persuade them to sell. For the policymaker, it means recognising that lower new homes values may result in less land value to be captured through CIL and section 106.
A commitment to solving the housing crisis is evident in the housing white paper, but to address the crisis where it is most acute will require a regional market led strategy for land release, including a programme of green belt swaps, the firm says.