As anticipated, fixing the broken housing market formed the crux of the Chancellor, Philip Hammond’s budget with a bold claim to build 300,000 new homes per year by the mid-2020s, supported by £44bn of direct capital funding as well as a suite of other financial measures.
According to current population projections, the number of households in England is set to increase by over 4 million over the next 20 years, equivalent to over 211,000 new households per year. Over two thirds of the target would be required to keep up with growth at that level, and the rest would help alleviate the pent-up demand from young people locked out of the market since 2008.
In the year to March close to 148,000 new homes were completed across England, the highest level since the financial crisis, but considerably below the government’s new target. According to official government data, annual new construction last hit 300,000 nearly 50 years ago (1969-1970) and back then, 47% were built by the public sector.
While supply at this level should undoubtedly help address affordability, leading commentators have forecast prices to rise across the UK by around 12%-14% over the next five years. Although more moderate than in the recent past tackling affordability in the housing market will not be an easy win.