Success in housing industry is more than just a numbers game

COMMENT: Housing is a hot topic. There is widespread recognition that we need to build more homes in areas of most need but the question of “how” is more nuanced, writes Gráinne Gilmore, partner and head of UK residential research at Knight Frank. The debate around how and where to build new homes gained further momentum before the conferences began as the Department for Communities and Local Government released a consultation on a new method to calculate “housing need” in local authority areas. This consultation suggests a methodology where the need for housing factors in affordability levels in each borough as well as population growth projections. Communities secretary Sajid Javid was quick to point out that “housing need” was not a hard and fast housing target, but some local authorities will be looking at new calculations showing that the need for new homes in their borough is set to rise dramatically. More homes being built Across the UK, housebuilding has been increasing. The number of new homes completed in 2016/17 was up by 37% compared to 2012/13. The number of “net additions” – the number of new homes brought into use through change of use or conversion as well as via housebuilding – is expected to be more than 200,000 in 2016/17, which is a key milestone compared to the 125,000 net additions seen in 2012/13. Housing starts are also rising, up 57% over the past five years, suggesting a continued increase in completions in the years to come. However, total completions are still likely to be well short of the 250,000 annual target for new homes. Even if the 250,000 target is met, this will do little to address the structural historical undersupply seen in the past few decades. Also, at a local level, some contrasting trends are emerging. In London, housing starts have fallen from a high seen in 2015, sliding by more than 20% in the year to the end of April compared to the previous 12 months, according to data from the DCLG. No silver bullet There is no silver bullet solution to increasing the supply of housing, a fact that was reflected in the Housing White Paper published earlier this year. The sheer range of topics covered in the paper, from the green belt to construction skills, illustrated that addressing the undersupply of housing needs to be a multi-pronged process. However, recent pledges by the mayor of London and the housing minister to look at creating new housing across all tenures, including build-to-rent or multi-housing, is certainly welcome. Likewise, a recognition in the housing needs consultation that the age of the population should be taken into consideration when planning housing is also key. Ultimately, building more housing is the aim, but building it across all tenures to match the housing need of all age groups will enable more movement in the market and enable the most efficient use of space in order to ensure as many people as possible have access to the housing they need and want. Join Gráinne Gilmore at MIPIM UK on 18 October as she asks a panel of experts from the private sector and Government about these and other key issues facing the housing market Click here to find about more about MIPIM UK and UK Cities