Knight Frank: Housing delivery to drop to below global financial crisis levels
Private housing delivery in 2020 will be lower than in the years following the global financial crisis, according to research from Knight Frank.
The property consultancy found that COVID-19 and the knock-on impact of the government lockdown, will result in 56,000 fewer homes being delivered this year, a decline of 35%.
The firm’s study into private housebuilding has highlighted that national housing delivery will stand at around 104,000 this year.
In London, new housing is set to hit its lowest point since 2014, with 8,000 fewer homes forecasted to be built compared to the five year private housing delivery average, which saw 14,405 completions.
Whilst housebuilding by private developers makes up just one portion of overall housing delivery, the drop will prove a significant setback to the Mayor of London’s yearly target of 55,000 new homes.
Knight Frank’s review of pipeline data suggests that (as of 17 April) work had been suspended on residential schemes capable of delivering nearly 250,000 new homes across the UK.
Whilst some of these will be on sites at various stages of completion, and on projects due to be delivered over a multi-year timeframe, it is clear that the building hiatus will have a sizable impact on the number of homes built in 2020 and beyond.
Justin Gaze, head of residential development land at Knight Frank, said: “Faced with supply chain challenges and a national material shortage, developers are under increasing pressure to adhere to tight social distancing controls, while also coping with an ever dwindling availability of skilled workers.
‘This has cast a dark cloud over the capacity for housebuilders to deliver at scale and speed.”
Last week marked the start of some housebuilders setting out their strategies for a phased return to site construction and operating, albeit with strict social distancing protocols.
In most cases this will mean a slow and steady return to activity. Knight Frank noted that; “this is not simply a case of flicking a switch back on.”
Gaze added: “Now is the time for the government to intervene and support the private sector in getting building again. There needs to be a pragmatic approach.
“Extending Help to Buy and relaxing planning regulations to give developers greater flexibility on Section 106 and Community Infrastructure Levy (CIL) payments would be greatly welcomed.
“Introducing a Stamp Duty holiday and streamlining the conveyancing process would also be a major stimulus. These measures would no doubt act as a real driver for the wider UK economy; helping to create jobs, new housing and ultimately receipts for the treasury via increased liquidation in the market.”
Indeed, even under the assumption that housebuilders recommence construction in early to mid-May, getting back up to speed will take time.
There are a myriad of issues related to the supply chain, for example, with question marks over the availability of building materials, as well as delivery, distribution and labour.
Oliver Knight, research associate at Knight Frank, said: “More intangibly, consumer sentiment will also impact recovery, and the fact remains that housebuilders will only build what they can sell.
In the short-term, this will mean giving priority to restarting and completing sites where there are existing customer orders.
“Of course, the key question which will determine the impact is ‘how long’. If Covid-19 disruption is short-lived that could mean the UK can get back on track relatively quickly. However, the longer the disruption the greater the pressure on the market and longer the recovery.”