Strong growth in housing supply at the end of 2018
The number of new homes built across England increased to 238,000 in the year to Q4 2018, a 12% increase on Q4 2017. This maintained the increased rate of growth in housing delivery seen in the previous two quarters. A similar rise in the number of starts suggests this growth could continue into 2019, but tough conditions in the sales market may hold back progress as consumers await the outcome of Brexit negotiations before committing to major expenditure. Housing delivery has increased across all regions compared with Q4 2017, with the strongest growth in London despite the slowdown in both house prices and sales. Even so, London only delivered 56% of homes needed at an aggregate level, as calculated by the standard calculation of housing need. Delivery also undershot need in the South East, East and South West, whilst delivery in other regions met housing need.
Even in the regions where housing supply meets need, there are individual local authorities with supply shortfalls. But the recent increase in supply has lifted several local authorities out of the danger zone for the Housing Delivery Test. Our mapped estimate shows how local authorities would perform against a Housing Delivery Test run for the three years to Q4 2018. 63% of districts passed whilst 5% failed to reach 45% of target delivery.
Planning consents declined for a 2nd quarter in Q3 2018 but remained 2% higher than Q3 2017 and well above housing delivery. The number of new planning consents is far above housing need across all regions except London and the fall reflects the reduced need for more land coming through the planning system in many areas as consents exceed housing targets.
Help to Buy transactions in Q2 2018 increased in volume a further 2% on the previous quarter. This is up 15% on the same quarter in 2017, as the equity loan continues to drive a large proportion of new homes sales. Our recent note (http://sav.li/d4o) looks at the potential impact of the changes to Help to Buy that will take place in 2021. Starts in the Build to Rent sector have remained flat in Q4 2018 and remain above 18,000 per year. There were 6,600 Build to Rent completions in 2018, a slight fall from over 8,000 in 2017 as completions continue to lag starts by a substantial margin. Affordable housing delivery in the six months to September 2018 is at the same level as the previous year.