Will the rise in new-home construction counter the housing crisis?


UK new-home construction and housing

Will the buoyant UK construction market and current government initiatives be sufficient to tackle the housing crisis that has been facing our country for at least the last 2 decades?

Whilst we wait for the next government’s Housing White Paper detailing its plans for building new homes later on this month, let us explore the state of the UK housing market from a construction perspective and see what is currently being done to tackle the housing crisis that is pervading throughout England and other parts of the United Kingdom.


The government recently announced the number of new homes being built in England has risen to its highest level in eight years. The Department for communities and local Government counted that there were 163,940 new homes built out of a total of 189,650 during 2015/2016, representing a 11% increase on 2014/2015. Moreover, another 893,000 new homes have been developed since 2010.

Furthermore, analysis firm Barbour ABI found out that the value of construction contracts signed in October was £2.3 billion (on average) which is the highest amount recorded since 2010 representing a 33.5% increase compared to September; this is 5.7% higher than October 2015.


In their September 2016 House Building release, the government identified that while new-build dwelling starts in the private sector were 8% higher in the September 2016 quarter than the preceding quarter, the starts by Housing Associations were 5% lower. Overall, figures are still respectable as the UK housing private sector which picked up in 1950’s, is still largely dominating the market. All this needs to be taken with a pinch of salt obviously as the number of new-home starts is only just beginning to meet the figures we had in 2003 and is still relatively far from the figures we reached in 2008.


The positive evolution of the UK new-home construction market is encouraging but will it suffice to tackle the housing crisis we are witnessing throughout the country?

A ResPublica think-tank report detailed how more than 6 million people face tenure insecurity and no prospect of ever buying their own home while another 1.2 million people have been put on housing waiting lists in England.

The Autumn Statement promised future investments of over £7.2 billion in housing. It is then expected that the annual capital spending on housing will be doubled over the course of this Parliament. The Northern Powerhouse Investment Fund (NPIF) will fund new housing infrastructure projects and the government will relax restrictions on grant funding to deliver around 140,000 new homes by 2020.  Even if we also consider the funds allocated to accelerated construction on the public sector land, and actions to speed up access to the Right-to-Buy for Housing Association tenants, we are far from the 200,000 new homes needed each year to start making a difference.


A couple of nationwide projects announced recently seem, however, to represent real actions from the authorities to apply the theoretical plans mentioned above.


On 2nd January the government has given his approval to back the first ever garden villages which the first 14 builds should approximately deliver 48,000 new homes. The garden villages will help tackle the housing crisis whilst preventing “poor quality developments on the countryside” according to Shaun Spiers, the Chief executive of the campaign to Protect Rural England (CPRE).

These smaller projects of between 1,500 and 10,000 homes are an expansion to the existing garden towns programme. We are expected in excess of 25,000 housing starts in garden villages and towns by 2020. The garden projects will also have access to infrastructure funding programmes across government, such as the new £2.3 billion Housing Infrastructure Fund announced at this year’s Autumn Statement. Here is the link to the map showing the location of the future garden villages.

Gavin Barwell, Minister of State for Housing, Planning and Minister for London at the Department for Communities and Local Government,commented: “New communities not only deliver homes, they also bring new jobs and facilities and a big boost to local economies”.


On 3rd January the nation was advised by the government of its plans to “support the acquisition, remediation and de-risking of further suitable land for starter home developments” through the £1.2 billion “Starter Home Land Fund”. These starter homes will exclusively be built for first-time buyers aged between 23 and 40 and will receive a discount of at least 20% below market value for properties worth up to £250,000 outside London, or £450,000 in the capital.


Whether you are working in housing, construction or for a government organisation, feel free to share your comments below.