Figures released in its report ‘Housing Intelligence: Headaches All Round For The New Build Market’, showed that the number of starts had fallen by almost 10 per cent in the last 18 months and would continue to do so as economic uncertainty undermined developers’ profit margins.
It also warned that incentives being offered by developers to shift current stock could damage the new build sector in the longer term as concerned lenders restricted lending on new properties.
Richard Donnell, director of research at Hometrack, said: “This article examines how a change in market conditions has left the government and the development industry in something of a tight spot. Put simply, there is now a high probability that in five years time we could be building fewer homes than we are today.
“We also look at how exposed new build pricing levels may be and the prospects for future housing output in light of the current policy agenda. If government wants housing output to rise it will need to react quickly to the change in market conditions.”
The report insisted that demand for property was still high but developers needed to shift their focus on what and where they built; with houses coming into vogue and less flats being built.
Neil Johnson, head of PR and policy at the Building Societies Association, commented: “The government is expecting the private sector to step in and solve the issue but the problem with the housing market is that prices are still so out of kilter with wages. Lenders are expected to help fill the funding gap but when house prices are at a ratio of 10 to one with wages, it a huge gap to fill.
“There’s this expectation in people’s minds that they have a divine right to buy a house. But it’s like a Ferrari; everyone wants one but not many people can afford them. Maybe we need to start thinking like that with housing.”
