Housebuilders maintain record investment in land

House builders are continuing to invest in land and getting new sites approved despite the wider political and economic uncertainty HBF/Glenigan’s latest Housing Pipeline report shows.

Builders had a form of planning permission granted for nearly 370,000 new homes in 2018, the second highest annual total on record and well over double the number being granted a decade ago.

Whilst many of the permissions will still take months or years to navigate the remainder of the planning process, the numbers underline the commitment of the industry to deliver further increases in housing supply in the years ahead.

Housing supply is up 78% in the past 5 years with 222,000 homes added to the housing stock last year. Whilst the level of increase is unprecedented, the total is still some way short of the number of homes the country needs to be building. To address the shortfall, government has set the industry a challenging target of building 300,000 a year by the mid 2020s.

The industry has invested massively in recruitment and training in recent years to ensure it can build both the volume and quality of homes the country needs. The latest industry customer satisfaction survey figures show that whilst volumes continue to grow, quality and satisfaction levels are also now increasing.

The numbers released in the report count permissions that will, in the main, be built out over the next two to five years. Whilst they suggest further increases in supply will be delivered some uncertainties remain.

It is still taking far too long for permissions to be processed by local authorities to the point where builders can actually start on site. The industry is keen to work with central and local government to ensure that local authority planning departments have sufficient resources to deal with the increased level of applications being submitted.

The industry’s ability to turn planning permissions into bricks and mortar is also reliant on a level of economic stability, consumer confidence and an effectively functioning housing market generally. Unlike the second hand market, new homes sales numbers are at historically high levels but the sluggish second hand market, and consumer uncertainty generally clearly pose a threat.

Stewart Baseley, executive chairman at HBF said the report shows that despite the wider political and economic uncertainties, builders are maintaining record levels of investment.

"The industry is investing massively in people and land to ensure it can meet the challenge set by Government to deliver even more, high quality homes," he continued.

“Last year saw output continue to increase alongside improved customer satisfaction levels. Builders are acutely focussed on delivering further improvements in quality and service levels alongside investing in more land to enable further increase in supply.

“The industry continues to work with central and local Government to ensure local planning departments have the capacity to deal effectively with the increased number of applications. It is also pushing Government for confirmation that it will have ongoing access to skilled labour from abroad post Brexit, which will be key to its ability to build out these sites.”

Glenigan’s Economics Director, Allan Wilen, commented, “The development pipeline remains strong, with the number of units securing approval last year close to the record level seen in 2017. The high level of approvals over the last two years is reflect the sustained flow of projects with approval that are already under construction or progressing to site.”