Over the last decade, private sector housebuilders have capitalised on the reduction of housing offered through local authorities and housing associations.
The biggest eight housebuilders in the UK have seen investors enjoy returns in excess of 250%, compared to 90% on the FTSE All Share Index.
Fuelling demand – Help to Buy
The government’s ‘Help to Buy’ scheme brought in five years ago has boosted the volume of housing starts and is continuing to drive a demand for affordable and new homes. First-time buyers are at their highest level since 2006.
As the housebuilding sector comes under pressure from Brexit and a skills shortage, there is an opportunity for a supply scheme to boost the number of small to medium-sized construction companies to increase the volume of new homes across the UK. The construction industry is appealing to the government to provide increased investment to attract, recruit and train people in all aspects of the building trade to meet the target of 300,000 new homes per annum.
New Supply Scheme Needed To Meet Demand
The last peak in the number of homes being delivered by the biggest housebuilders was 2007 and figures show current levels have reached the same high. In contrast, the last four decades has seen a marked decline in the output from small to medium housebuilders from their peak in 1989.
Numbers have steadily dropped by around 80% – equating to under 2,000 new dwellings being built each year. Planning regulations and local planning departments favouring large-scale sites, together with a clawing back of finance following the last financial downturn, has hindered the smaller building firms.
Opportunity Knocks For Small To Medium Housebuilders
The time and opportunity is right to call for a new scheme on the ‘supply’ side, running parallel to Help to Buy, that could enable small and medium-sized housebuilders to return to the marketplace and create exciting and affordable developments for a nation of buyers, benefiting from Help to Buy.