The number of planning permissions granted for new homes in Q1 of this year remained high, HBF and Glenigan’s latest Housing Pipeline report shows.
Permissions for 66,102 homes were granted in the first three months of the year in England, up 4% on the previous year.
The Moving Annual Total has now recovered to just short of the pre-crash peak in the 12 months to March 2008, and is ahead of the levels in 2006 and 2007, suggesting house building can continue increasing to meet the very high level of demand for new homes.
Whilst many of these permissions still have some way to go before builders can start building them, the figures are a strong indicator of future supply.
Permissions have risen steadily every year since 2009, with actual housing supply also increasing markedly over the past two years as more of the permissions have progressed to the point where builders can begin building. The last 12 months have seen a 66% increase in permissions granted on the nadir of the recession in 2009. Numbers are now only 0.3% below where they were at the highest point in early 2008.
Demand for new homes remains extremely strong. HBF estimates there is a shortfall of well over one million homes in England. Almost a third of young people (3.35m) are living at home with their parents and 1.24 million people are on housing waiting lists. The Help to Buy equity loan scheme continues to drive demand for new homes and interest rates remain historically low.
Over 180,000 new homes were added to the housing stock in 2014/15 – up 22% on the previous year - as house builders increased output in response to the rise in demand for new homes.
Peter Andrew, Deputy Chairman of the HBF, said: “Planning permissions are a strong indicator of future levels of supply. The past two years have seen huge increases in building levels, with housing supply in England surpassing 180,000 homes per year in 2014-15, up 22% on the previous year.
"We still face an acute housing shortage in this country. Millions of young people remain at home with their parents and we estimate we are over a million homes short of what the country needs. Help to Buy equity loan is driving demand and helping thousands of first time buyers a week purchase a new build home and with interest rates remaining at historically low levels, demand remains strong.”
Allan Wilén, Economics Director, Head of Business Market Intelligence at Glenigan said: “The level of planning approvals remains strong, driven by an increase in the number of private housing units approved. The firm development pipeline demonstrates that housebuilders are well placed to meet any strengthening in demand from house buyers."
Many of the permissions counted in the report still have many hurdles to cross as they navigate the complexities of the planning system before actual building work can get underway – for example discharging planning conditions. The industry will continue to urge Government to streamline the planning process and ensure Local Authorities have the capacity to deal with the volume of applications now being processed so builders can get on to more sites more quickly.
