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Can the UK reach 200,000 new homes a year target by 2016?

10 years ago studies led by the Government concluded that 250,000 new homes needed to be built every year in the UK to satisfy the growing market demand for home ownership, and to keep decent housing in an affordable price range for the average working family.

Today the number of houses being built is still way of that mark with just 141,000 new homes built in 2013 – 2014. During the previous year of 2012 – 2013 the figures showed a post-war low of 135,000 homes were built. The consequences have seen prices soar, particularly in London but also in other areas of the UK as demand outstrips supply.

In light of the low new build figures from the past two years, the current government have cut down the target to a more modest 200,000 new homes to be built every year by 2016, but an overwhelming majority of industry insiders still don't believe this target is realistic.

There can be no doubt that the financial difficulties of the past years have played their part in the relatively low number of new houses being built in the UK, with many firms going out of business and the confidence of those that remained understandably rattled.

With the economic recovery now gathering pace and the housing and construction market in particular showing strong growth, questions have to be asked on what other issues are holding back house builders and what can be done to encourage construction over the next few years.

As we mentioned in this article in September last year, the Government have pushed further emphasis on self builders with the Right to Build scheme and other incentives to build your own home. Also mentioned in the same article from September last year is the fact that in countries such as Austria, France and Germany around 60% of people are involved in the housebuilding process, whether that is the design or actually physical production – that is way ahead of the UK figure.

More self builders would certainly help boost the numbers closer to the 200,000 a year target, but are unlikely to be enough on their own.

Issues affecting house building in the UK

The Planning System is often blamed by house builders for blocking or slowing down the production of new homes. The government has tried recently to simplify the planning process with some success however many house builders still claim that planning is too slow and expensive.

Perhaps a promising sign for the market from recent government figures is the fact that detailed planning permission for new build homes rose to 240,000 in the year to September 2014 – that is up significantly from the 158,000 approved in 2011.

It is estimated that of the 240,000 homes with planning permission, a final figure of somewhere under 200,000 will actually be built with lots of the plots planning permission expiring before they are built.

Another perceived problem with the planning system is the strict protection of the greenbelt, which is often attractive land to developers sitting on the edge of existing popular urban towns and cities.

One issue the government may need to legislate for is the fact that by it's nature it suits house builders to develop large building sites slowly and release a few houses at a time.

By keeping the local supply low and the demand high for a particular development builders can get the most value from their land assets.

Many House builders point out that this is good business sense, but also that they can only build at the rate a local market will support.

The other major question about the housing shortage is, who is building the homes?

Up until the 70's local councils provided more new home construction than private companies. Today the government is barely involved in house building at all. While that is unlikely to change dramatically the government led creation of garden cities, developed by private companies, such as the one in development at Ebbsfleet could add a significant chunk of new housing.

A skills shortage could also slow down the pace at which new homes can be built in the next few years, after many skilled tradesmen left the industry during the recession. Now left with an ageing workforce, the industry needs to recruit more fresh blood if it is to thrive.

Despite a lot of positive signs it is clear that there is still a lot of work to be done if the UK is to get anywhere near it's 200,000 new homes a year by 2016 target and it will be interesting to see how things develop throughout 2015 and beyond.

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