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Housebuilding forecasts – time for action on social housing Matthew Warburton - 14/02/2014

housing_graph_300Housebuilding is set to rise by 55 per cent over the next five years, according to research published this week by property consultants Savills. By 2018 they expect output to have risen to 167,000 homes a year, a big increase on current numbers, but still well short of the 240,000 homes needed to meet demand. And this, admittedly, is an optimistic forecast. Susan Emmett, director of residential research at Savills, said: 'We have made some robust assumptions about increase, but it's worrying that even a best-case scenario is still not good enough to meet housing need.'


The forecast assumes that private sector output will rise incrementally by 8 per cent a year as the economic recovery takes hold, to yield an average of 107,000 homes a year over the five year period. However, even by 2018 the number of homes built will fall well short of the 154,000 completed in 2007.


Housing associations are assumed to deliver the 2011-15 HCA programme, completing 26,000 homes in 2014 and 34,000 in 2015. Completions are assumed to continue at around 34,000 a year to 2018. Council house building is assumed to grow steadily to 10,000 homes a year by 2018, although detailed reasons for this prediction are not given.


As Savills point out, this is a best case scenario on the basis of current policies. It provides some useful pointers as to where Government should focus action to raise output closer to what is needed. Best estimates suggest that around a third of the 240,000 homes required national should for sub-market rent.


With housing association output focussed on 'affordable' rented housing, it will be up to councils to meet the demand for housing at social rents which are affordable by those on the lowest incomes, particularly in areas where the gap between market and social rents is wide. If the overall aspiration is 80,000 homes a year from councils and housing associations together, output needs to more than double the expected 2014 total of less than 30,000 completions.


Further action is also needed if private sector output is to grow to 160,000 homes a year, but this represents only a 20 per cent increase on Savills' prediction for 2018. The debate on whether Help to Buy will push up house prices or raise output is important, but it should not distract attention from the need for urgent action to stimulate the construction of more social homes.

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