Regional demand could slow decline in housing association building programmes

Buoyant demand outside London and the south east for a mix of market sales, market rents and shared ownership tenures could “cushion the fall” of social housing construction activity by housing associations.

In its Spring 2019 review of the industry the Construction Products Association said raising finance remained an issue for housing associations, with the annual 1% cut in social rents being exacerbated by lower levels of grant funding, a greater reliance on market-linked housing and concerns around accessing finance from either the European Investment Bank once the UK has left the EU or its domestic replacement.

Housing association start dates were likely to be delayed as the general downturn in the housing market hit prices and consequently the ability of housing groups to subsidise their social and affordable activities with open market sales, the CPA added.

But if underlying demand for open market sales, market rentals and shared ownership remained buoyant beyond London and the south east this could “cushion the fall in housing association social housing construction activity”.

Despite signs of an increase in activity among local authorities, housing associations accounted for 89% of public housing completions across the UK in 2018.

Growth in the number of public housing starts is forecast to grow by 2% this year, rise to 5% next year and then ease back to 2% again in 2021.

The CPA said that last year there were 34,853 public housing starts, effectively flat compared with 2017, while this year would see 35,550.

This figure would rise to 37,327 in 2020 and 38,074 the year after.

Public housing completions rose 5% last year, but the CPA was forecasting this growth rate to slow to 2% this year – 36,833 – and next, before rising by 5% in 2021.

The CPA said shifts in government policy had begun to increase the role of social and affordable tenures across overall housebuilding activity, but that apart from the £1bn finance fund announced by Barclays and Homes England in September last year there had been little more in the way of funding announcements.