Housebuilding construction

Housebuilding outlook soars as planning approvals rise by 8%

The housebuilding sector is returning to strength after a surge in planning consents, even surpassing its performance in the years leading to the pandemic.

Supply chain issues and rising construction costs were just some of the issues striking the construction and housebuilding industries in 2020, alongside Covid. The year experienced the lowest level of planning permissions granted since 2015, at just 295,000 in the residential sector.

But 2021 saw a remarkable turnaround, new research from Sirius Property Finance has revealed. Not only was there an 8% surge annually on new home planning consents, bringing them to 319,000, but this was the third highest annual total since 2007.

Sirius noted some regional variations in its data. London could be the recipient of a healthy surge in housing stock shortly, as 60,200 residential properties or units were granted planning permission in 2021. This accounts for almost a fifth (19%) of the country’s total.

The south-east followed with 46,500 planning consents in the residential sector (15%) of the total. The north-west is also set to benefit from large amounts of new housing, with 42,300 planning permissions granted.

A positive outlook

Despite the challenges, such as Covid complications, labour shortages and rising construction costs, Nicholas Christofi, managing director of Sirius Property Finance, believes the country’s housebuilders have remained extremely resilient.

He says: “We’ve seen a sharp increase in the volume of planning applications being granted over the last year which suggests that there is plenty in the pipeline to satisfy the ongoing need for more housing.

“While 2022 will bring its own challenges to the sector, granting the nation’s housebuilders the ability to build is the first step in increasing residential stock levels and addressing the current housing crisis.”

Overall, it seems the construction industry remains positive in its outlook. According to a WhatHouse? Predictions report earlier this year, almost three quarters (71%) of housebuilders say they are cautiously optimistic about the year ahead.

The survey also showed that 73% of builders predict material shortages, particularly in bricks and timber, will be key concerns for 2022.

A scarcity of bricklayers and plasterers was another issue flagged up in the survey. 67% in the housebuilding sector think that these obstacles will hamper the supply of new housing stock, as well as planning constraints and logistical issues as a result of Brexit.

Meeting housebuilding targets

Over recent years, planning departments have been the target of blame for the low levels of new housing stock coming to market.

Last year, a report commissioned by The Land Promoters and Developers Federation (LPDF) and the Home Builders Federation (HBF) concluded that the planning system isn’t delivering anywhere near enough permissions to meet the government’s housebuilding targets.

The report states that if the government is to deliver 300,000 homes a year, 1.5m homes need to be built over a five-year period.

“In accordance with the National Planning Policy Framework requirement for local authorities to maintain a rolling five-year housing land supply, the number of homes with planning permission at any one time will need to be aligned with this objective, which means figures in excess of 1 million should be expected.

“In reality, the number of homes with planning permission will need to exceed the size of the pipeline, because some permissions will be delayed, re-planned or lapse, and some will deliver homes beyond a five-year horizon.”

More to the story

But many acknowledge that there is also more to the supply and demand imbalance and other issues affecting the housing market than simply housebuilding.

A recent study by Places for People, in conjunction with the University of Cambridge Centre for Housing and Planning Research, reported that, while building more homes is crucial, the full picture is more complex.

The report acknowledges that a lack of housing stock does play a part in the changing market and inflated prices. Population growth and changing social patterns also influence this, though. Therefore, the problem comes from both the supply side and the demand side.

“On the supply side, we identify the principal drivers of the affordability crisis to be an ageing population; changing household patterns; the growth of cities; and the availability of cheap money.

“On the demand side we identify the principal drivers of the affordability crisis to be low volumes of ‘second hand’ sales, a lack of choice in the market, and a long term failure to build sufficient homes to meet demand — driven by weak investment, high costs, and a combative and constraining planning system.”

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