House Building Down in February and More Homes Still Needed
Over the past few months there has been an increase in optimism across the housing market. Construction activity and sales of new properties have been increasing, which has helped to give the sector a much-needed boost following the recession. Figures for February, though, show a slight decrease in activity, largely due to the poor weather.
New-Build Registrations Down
There was a slight slowdown in the construction of new homes in February. Figures for the month were 10% less than the same month in 2013, which can partly be attributed to the large quantities of rain that fell in many areas of the country. This limited the amount of work that could be carried out. Within the South West, where there were a number of incidences of flooding, registrations of new homes were down 19% over the rolling quarter of December 2013 to February 2014.
However, even with this small decline in the market, the overall trend is that more new properties are being built. The rolling quarter saw figures up 14%, with 29,557 new homes, from apartments with a Juliette balcony to large family homes, registered between December and February. The market is still recovering from the recession and it is not yet on the same level that it was before the downturn. However, there are increasing signs that it?s moving in the right direction.
A Housing Shortfall
As the construction industry starts to pick up speed, the issue of a housing shortfall needs to be addressed by all those concerned. According to figures from the Home Builders Federation, we still have one million fewer homes than the country realistically needs to house the population.
The Barker Review of Housing Supply, which was commissioned in 2004, highlighted that we needed a minimum of 210,000 new homes to be built a year to address the long-term issues of property ownership. However, since the publication of this report, there has been an average of only 115,000 homes built. This period has taken the country through the recession, when less people could afford to buy, and has led to an increase in property prices as demand outstrips supply.
With a decline in housing activity over the past few years, the problem has now become even worse. Due to population increases and a need to make up the shortfall in housing stock, we would now require 260,000 homes to be built every year to rectify the situation. This includes everything from starter homes with a Juliette balcony to luxury properties. If this happened, it would enable more people to get a foot on the ladder by pushing down prices to a more realistic level as a higher number of properties come on to the market.
The decline in registrations that was seen in February is only expected to be a short-term occurrence. As the weather improves, house-building activity traditionally increases, but there will need to be further changes if the housing shortfall is to be solved.