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The number of new homes starting construction in England next year could fall to just 50,000 “leaving the government’s house-building targets in tatters”, according to a report on Saturday from property consultancy Savills.
Savills predicts that starts of new homes could fall to just a third of the level in 2007, and significantly below the annual government target of 240,000 new homes.
Many of these new starts will be by government-funded registered social landlords, said Savills, with very few private sector builders prepared to risk starting on new homes that may not be sold.
Its current expectation was that 75,000 new homes would be built next year. But that forecast could easily be revised downwards to its worst-case scenario of just 50,000 new home starts in England in 2009, Savills said. “This would amount to just 30 per cent of 2007’s output, leaving the government’s house-building targets in tatters. Who is going to start next year, given the economic conditions?” said Jim Ward, director of research.
Monthly home starts have already fallen to their lowest levels on record as both national and local house builders struggled to offload existing units on their books in the face of the worsening housing slump.
Margaret Beckett, housing minister, has stuck to the government’s ambitious housing targets since she took over the post, despite widespread scepticism of the annual target.
In a speech written for the annual lunch of the National House Building Council last month, Ms Beckett said that while longer-term goals were more difficult, this should not mean they should be scrapped, as this would “store up even more substantial problems for the future”.
Although the 240,000 new homes target includes home conversions, there appears to be little chance it will be met next year. New home starts in October fell to their lowest level since records began, the NHBC said, with expectation that as few as 85,000 homes will be registered in the 12 months to the end of March next year.
This compares with 184,000 recorded in the same period last year, and would be the lowest annual figure since the early 1980s when NHBC records began. Imtiaz Farookhi, NHBC’s chief executive, warned the industry risked losing a generation of skilled workers.
Savills said that the price of new homes had fallen faster and further than the mainstream UK market, with new flats now selling for 20-25 per cent less than last year’s peak.