A substantial increase in housebuilding over the next five years will not meet demand and push up land prices according to the latest Savills forecast. Although England needs 240,000 new homes a year, the report predicts volumes in England, despite rising 55 per cent, will only meet 167,000 by 2018. Private housebuilders will struggle to make up the difference: building 107,000 units a year compared to the 154,210 built in 2007 and the peak 203,320 built in 1968.
Susan Emmett, director Savills residential research, told Spear’s: ‘The burden of meeting the country’s growing housing requirement cannot be placed on the major housebuilders alone. We need to encourage a greater variety of players to deliver more homes, especially SMEs whose numbers have shrunk since the downturn. Access to finance is crucial to make this happen. On top of this, promoting different routes to market, such as build-to-rent, would also be a great step forward.’
The price of land will adjust accordingly, increasing with appetite for larger sites, all buoyed by the consolidation of the housing market recovery. The report highlights more confidence in larger and longer term development sites. Last year the value of 30 acre ‘permissioned’ sites increased by 7.5 per cent (up 3.7 per cent in Q4 alone), while one and five acre sites increased 5.8 per cent and 6.4 per cent, respectively.
Emmett identifies an improving economy with ‘a lot of new supply from the private sector [which] will be aimed at market sale. However, bolstering the private rented sector with higher quality housing at market rents will be key to providing the levels of housing the country needs.’
Nowhere is the shortage more pronounced that in the hothouse of London and the south-east where 50,000 new houses a year are needed. Emmett was forthright in dismissing perceived barriers to building new homes, claiming residential researcher ‘Molior has identified enough sites on which to build 850,000 homes. Then there’s surplus public land, industrial land and estate regeneration to consider… and better use should be made of the doughnut of suburbs around the city if we are to build a greater number of affordably priced homes.’
It seems these homes will remain illusory until the capital has a cohesive and long term strategy able to address both public and private interests: ‘London needs to work as one city and not 32 boroughs. We need a common vision, greater planning flexibility and a strong mayor at the centre willing to use his powers to pull together big schemes.’