New homes industry plunged into fresh turmoil

News Category: Industry News

Housing shortages look set to worsen while the future of housebuilding looks beset with uncertainty after developers made earlier efforts this year to re-stock their land banks.

The price of greenfield and brownfield residential development land rose by 6.1% and 3.7% in the second quarter of 2010, bringing the annual rate of increase to 20%.

Knight Frank also reported a 10% rise in demand, outpacing supply.

But the agents warned that evidence from the market from mid-June has been more subdued.

This follows the announcement of planning changes by the Coalition Government, which include the scrapping of national housebuilding targets and a new ‘localism’ approach to planning with a ‘new homes bonus’ announced yesterday.
Liam Bailey, head of residential research at Knight Frank, said: “We believe the land market will become increasingly parochial and as a consequence its performance will be erratic.

“We believe that the structure of the Government’s proposed planning policy will cause considerable disruption to an already fragile planning environment and we expect a fall in planning applications.

“The political complexities of the new planning policy will create uncertainty and delay and will result in industry-wide frustrations.

“What is really needed is a system which divorces itself from politics and responds to the pragmatic issues of housing needs, but unfortunately this sentiment does not seem to have prevailed.”

Bailey’s warnings came as housing minister Grant Shapps confirmed that local authorities will get the equivalent of six years of council tax for every new house.

But there was a chorus of critical voices saying this was insufficient incentive.

The New Local Government Network think-tank called for bigger incentives for areas with acute housing needs.

Steve Lees, marketing director of SmartNewHomes.com, said: “The housebuilding industry was desperate for detail on the Coalition’s housing policy to fill the policy vacuum left by the abolition of Regional Spatial Strategies after the election. However, the latest outline proposals will leave many in the industry feeling that ignorance was bliss.
 
“Shapps talks of ‘powerful incentives’ to build, but the reality is that matching council tax (a total of approximately £8,500 per new home over six years) is simply not enough money to counter nimbyism in many of the areas where the housing shortage is most acute. Not only that, but funding will not filter through for months, given that the consultation paper will not be released until late October at the earliest.
 
“The housing shortage is at desperate levels. This already dire crisis now looks set to get worse.”


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