Housebuilder News: Measuring the effect of the Coalition's housing policies

publication date: Feb 28, 2011
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author/source: Article by Housbuilder Magazine
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Housing Policy in the UK


Housebuilder: Measuring the effect of the Coalition's Housing Policies


Great blog from Housebuilder, which considers the dangers of scraping housing targets:-

When Grant Shapps first revealed his plans to scrap housing targets, it raised many questions among a sceptical audience. One of the major questions asked by industry experts was this: "If there are no targets for building new homes, how will we know if we are building enough or not?"

It's a great question, because the impact of a lack of supply of new homes is one that is not felt overnight - it has a long term effect, one that seeps through over a period of time in the form of higher house prices, overcrowded homes and homelessness. Compare that with a lack of supply of, say, milk....or efficient refuse collectors...or grit in winter...or flu vaccinations. These supply deficiencies have an immediate and obvious impact and so detailed measurement is not required in order to prompt action.

But housing is different. While there were targets, we knew where we were. Admittedly, as Shapps often points out, the targets were never hit - but at least there was an idea of how far short we were so the issue at least could be discussed, if not solved.

The new alliance between the Home Builders Federation and Glenigan to publish and comment on statistics of new home approvals is, therefore, a neat way for the industry to bring back some sort of measurement of what is happening in the market.

The figures released today are for Quarter 3 2010 - although I understand HBF and Glenigan expect to catch up with Quarter 4 soon to ensure the figures are as up to date as possible. Today's figures show that approvals for new homes in Q3 2010 in England stood at 31,553 units. HBF points out that this number has slumped from 40,453 in Q1 and that "this drop coincides with radical changes to the planning system and a shift from the old top down targets." 

This is true, although what isn't highlighted is that the major drop actually happened between Q1 and Q2 (32,750), before the election in May. My assumption here is that local authorities started to act in advance of the anticipated Tory victory, prompted no doubt by the rather presumptuous pre-election letter from then shadow communities secretary Caroline Spelman who made it clear what Conservative plans would be in the event of election victory.

The full implications of the numbers can be analysed by economists and experts, who will no doubt look at applications as well as approvals and projects as well as units to see what  is going on.

But the important thing is that through these Glenigan/HBF numbers the industry has a measure - something to show to government to illustrate the effect of its policies. The drop in units is not surprising - but it is worrying and will be more worrying if  levels of approvals do not start rising again soon as the government believes they will.

Meanwhile, latest news from these figures, show Latest NHBC figures show that new home registrations in the UK in 2010 were - at 115,458 - 30% higher than 2009. Figures for the final quarter of the year show private sector and public sector registrations up on the same period in 2009. In December, despite the snow, registrations hit 7,385, 3% up on 2009.

NHBC CEO Imtiaz Farookhi said: "No one is popping champagne corks but there is a growing belief that the worst is now behind us and we're on the road to recovery."

Also take a look at Kate Faulkner's article New Homes Bonuses - Will it Succeeed or Fail?


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