The UK’s house supply crisis will get worse without stronger government intervention, the National Association of Property Buyers has warned.
According to Jonathan Rolande of the NAPB, confidence among housebuilders is low. “It’s hardly surprising,” he said. “There is a real possibility that property prices will shrink significantly in 2023, borrowing costs have rocketed and there are still logistical problems with labour and materials. None of this bodes well for housing and there is a risk the supply crisis will deepen in 2023.”
Supply of newly built and converted property has not kept up with demand for many years, added Rolande. “Government figures show we need at least 300,000 new properties a year,” he said. “This keeps up with demand but does little to massively increase stock in order to suppress sky-high prices. But the stark reality is that even this relatively conservative figure has not been met.
“Whilst the government argues about whether to impose ‘top down’ targets on councils or not, the real stumbling block appears not to have been seen – and that’s addressing planning laws which hold us back from boosting supply.”
Construction companies are fearful of the market, according to Rolande, and instead of building property that may not sell, they will choose to build only the sites that have a more or less guaranteed return. “Who can blame them?” he said. “As inflation gets back under some control and labour is freed up from elsewhere due to the economic contraction, costs will reduce and the situation will begin to return to normality. But we should not expect a sufficient number of new homes to be built if the profit margin simply isn’t there.”
If there is a drop in values and a slump in transactions for a long period, the country will be faced with an even more acute housing emergency in the coming years, Rolande warned. “But then the question will be about who fills the gap left by housebuilders waiting for the market to recover,” he added.