Industry braced for tipping point as government focuses on local housebuilding targets

According to today’s UK House Price Index from HM Land Registry, UK average house prices rose 2.7% in the year to June 2024, continuing the previous upward trend in May 2024, which saw a 2.2% increase. The average price of property in the UK in June was valued at £288,000. UK house prices have also risen 0.5% since the previous month.

The latest regional data also shows there was a significant variation in price rises across the UK, with Northern Ireland and Yorkshire and the Humber leading the way with the highest annual growth of 6.4% and 4.7%. However, London house prices only rose by 0.6% in the year to June. 

Kelly Boorman, national head of construction at leading audit, tax and consulting firm RSM UK, comments: 'The latest house prices in June show that the industry is reaching a critical moment as house prices start to rise, driven by falling interest rates and increasing accessibility to mortgages. However, RICS has reported a slowdown in new listings in June, highlighting the importance of government reintroducing mandatory housing targets. 

'This follows a long period of tension for housebuilders trying to access land for development, with challenges linked to land availability, planning permission, regulatory hurdles and economic uncertainty. But, the tipping point in the market is looming. Given the variations in regional house price growth in the year to June, the government’s focus on planning and housebuilding in conjunction with local authorities, ensures housing developments reflect the needs of communities and improves the likelihood of housebuilders obtaining consent to build.'

She added: 'However, while the housing market is braced for revival and an uplift in prices, there has been some volatility due to a lack of available funding, which has had a knock-on effect on the volume of affordable housing. Government’s proposed ratios for affordable housing build versus private residential on major housing developments, drives housebuilders to re-assess margins and partnerships with social housing associations. The government’s incoming Housing Strategy needs to address the funding and social housing needs, as well as incentives for first-time buyers to pursue home ownership.'