THE UK GOVERNMENT looks set to fall far short of its manifesto commitment on house building in England, with developers having built fewer than 100,000 homes during the first three quarters of 2020, and the sector facing headwinds in the coming year too, according to new Resolution Foundation research.
Housing Outlook Q1 2021 examines the impact of Covid-19 on the supply of new homes in England in 2020, and the medium-term outlook for housing supply, set against the Government’s target to build one million new homes over the whole of the parliament, and 300,000 a year by the mid-2020s.
These welcome targets were highly ambitious even before the pandemic, says the Foundation, with England’s annual housing output surpassing 300,000 only six times since the end of the Second World War.
Concerns about workplace safety due to Covid-19 led to the closure of many construction sites in late March 2020, with private housing output falling by 60 per cent in April. As guidance on ‘Covid-secure’ building sites emerged and restrictions loosened however, activity picked up and output had returned to its pre-pandemic level by September 2020.
But with just under 96,000 new homes built in the first three quarters of 2020, the Government has struggled to get out of the blocks in reaching its ambitious target of building one million new homes.
And while house-building has bounced back quickly, the Housing Outlook highlights other challenges facing the sector in the medium-term.
It notes that ongoing uncertainty around the future spread of the virus, falling household incomes on the back of rising unemployment and the end of the Stamp Duty cut are all set to weigh down on house prices, which are expected to fall following strong growth during 2020. Such a fall in prices would suppress new private house building activity in the short term.
The sharp fall in migrant workers across the sector during the pandemic could also restrict the UK’s ability to build more homes, says the Foundation. This is especially true in London, it notes, where over half of construction workers were migrants prior to the crisis. Getting UK-born workers trained and ready to fill this gap is likely to take time.
Finally, the Housing Outlook say that while there is potential for the social sector to fill this gap in output, the sector contributed to less than one-in-five new permanent dwellings in 2019, compared to one-in-three at the peak of UK house building in 1968 (when 352,000 homes were built).
The Foundation argues that the Government could improve its chances of achieving its manifesto pledge by boosting the funding for the Affordable Homes Programme, which is currently set at £11.5 billion over the period 2021-26. As the social sector is more protected from the market than the private sector, this would enable building to continue regardless of the economic crisis.
Lindsay Judge, Research Director at the Resolution Foundation, said: “This Parliament was supposed to be a record-breaking one for housebuilding, with one million new homes built over the five-year term.
“But Covid-19 has dealt an early, and significant, blow to that target, with fewer than 100,000 homes built during the first nine months of 2020.
“Firms were back working at pre-pandemic capacity by September last year, but uncertainty surrounding new variants, unemployment and house prices is likely to suppress new private building activity in the medium term.
“If the Government wants to hit its welcome target, it should turn to the social housing sector – which historically has provided up to one-in-three new homes – to provide the supply that millions of families in Britain need.”
* Read Housing Outlook Q1 2021: The Impact of Covid-19 on Housing Supply here.
* Source: Resolution Foundation