Housebuilding slowly returning to pre-crash levels

New figures out today show that new build dwelling starts in England in the first quarter of 2017 were estimated at 43,170, a three per cent increase compared to the previous quarter and a 21 per cent increase on the previous year.

New build starts are now 152 per cent above the trough in the March quarter 2009 and just 12 per cent below the March quarter 2007 peak showing that activity is slowly returning to the levels seen before the financial crash.

According to the Office of National Statistics, new build starts were broadly steady from 2003-04, averaging around 44,000 units each quarter until late 2007. However, starts were strongly affected by the economic downturn from the start of 2008 when there was a period of rapid decline to a trough in the March quarter of 2009.

Of the 43,170 new starts in the first quarter, 84 per cent were private sector projects, 15 per cent were housing association and one per cent local authority.

In the recently published Housing White Paper, the Government noted that England needs between 225,000 to 275,000 or more homes per year to keep up with population growth and start to tackle years of under supply.

Kelly Boorman, head of construction at RSM, said:

‘It has taken some time, but new build dwellings starts are edging back up to pre-crash levels. This growth will need to be sustained if the government is to deliver on its commitments to tackle the current lack of supply in the residential housing market.

‘The market is facing a number of challenges at present. With the average age of first time house buyers being 32 in London (30 in the rest of the UK), and mortgage terms often exceeding 25 years the market place faces challenges in future years in the availability of affordable properties for the elderly.

The construction industry is also facing a struggle to recruit skilled workers. According to one recent estimate, 400,000 new workers will be needed each year – equivalent to one every 77 seconds – to work on UK housing and infrastructure projects. This will prove to be a real headache for construction businesses, particularly if there are to be curbs placed on recruiting talent from the European Union. Firms may have to be a little more creative in their approach, offering quality training and apprenticeship opportunities and generous packages to attract and retain staff.’