Housing supply rose 10% to 233,000 last year

A net total of 232,820 homes were added to the housing stock in England in 2021/22, government data released today has shown, but housing analysts have predicted the figure will fall back again next year. 

The total net additional homes in 2021/22 was a 10% increase on 2020/21 figure but remained 4% down on the 242,700 net additional homes delivered pre-pandemic in 2019/20.

The 2020/21 figure included 210,070 new build homes, up on the 191,820 new build homes in 2020/21, and down on the 219,120 homes built in 2019/20. 

While the figures have risen they are still well short of the 300,000 new homes a year, which is the Conversative party’s 2019 manifesto housebuilding pledge.

Central housebuilding targets are currently a sticking point that has delayed the report stage of the Levelling Up and Regeneration Bill, with backbench rebels tabling amendments designed to see targets scrapped. 

Housing commentators said the rise in additional homes was not a surprise as the sector “rebounded” after the covid pandemic. 

Rico Wojtulewicz, head of housing and planning policy, said: “Construction worked throughout Covid-19 lockdowns, so it’s no surprise that new build supply is bouncing back after a drop in completions.”

Although, he said in “normal times”, without economic turmoil, it would have been expected that supply would break the 250,000 additional dwellings mark for 2022/23. But, he added, there were risks “stagnating new build growth or even reversing it”. These included that many full permissions have now been built out and new ones are being granted far too slowly, that material costs and delays are delaying schemes and pushing up sales prices, and that changes to Building Regulations are not well understood by the industry or by councils.

Last week the Office for Budget Responsibility (OBR) published forecasts predicting a cumulative 9.2% drop in house prices between the 2022/23 financial year and 2024/25, with private housing completions dropping from 174,450 this year to a low of 134,561 by 2025/26. The OBR said housebuilding completions will not have recovered to their current level by the end of the forecast period in 2027/28.

Stewart Baseley, executive chairman of the Home Builders Federation, said: “Housing supply has doubled over recent years due to unprecedented investment from UK home builders and supported by the pro-growth policy environment prior to 2018. The construction of these energy efficient new build homes is not only saving homeowners thousands of pounds each year, this economic activity is also supporting close to one million jobs in the sector and associated supply chains.” 

Although, he warned the government needed to “re-engage with industry and address the anti-business and anti-development barriers” so that supply did not fall back. Housebuilders have called the £3bn Building Safety Levy, for which the government released a consultation on Tuesday, “anti-development”. 

Neal Hudson, managing director of consultancy Resi Analysts, said the figures were “broadly where” he “expected them to be”. “New build completions were a little higher, which is clearly a rebound from last year’s numbers”. But he said going forward there was an “awful lot of uncertainty about what will happen”. 

“It seems likely new build will fall with the end of Help to Buy and higher mortgage rates”. He added it was now more expensive for developers to borrow, with higher interest rates. Applications for the Help to Buy equity loan scheme had to be submitted by the end of October, and the scheme winds up in March next year. Housebuilders are concerned its end will result in a drop in housing supply. 

Lucian Cook, Savills’ head of residential research, said the 2021/22 figures were from “a period of strong market conditions” in the post covid bounce. He also said that the end of Help to Buy was likely to affect housing delivery figures. “As we go forward with weakening market conditions and less government support this represents [the 2021/22 figures] a high point for the market.” 

Savills’ have calculated there will be 1.2m housing transactions in the UK this year and 870,000 next year. 

Cook added: “From everything we are hearing from housebuilders, they will build to the capacity of the market so we will see a notable decline in housing delivery in the next few months.”