The Government's New Towns ambition has been broadly welcomed, with Housing Secretary Angela Rayner before the election setting out to a property conference her ambition to see housing completions at New Towns within five years.
However, the Housing Minister, Matthew Pennycook has now said that he does not expect to see housing completions at New Towns this Parliament. Speaking to Radio 4 Today on 31 July he said new towns, "take time. They will be fully up and running in many instances only in a second term," while confirming, "spades in the ground" are the aim for this Parliament. This means that the New Towns programme is not expected to contribute to the 1.5 million new homes target this Parliament. New homes will have to come from the current housebuilding delivery approach.
Many in the industry consider that a baseline of around 1-1.2 million homes, while very ambitious, can be met. That would be in line with the upper end of housebuilding performance in recent years. However, this would in itself need significant interventions, particularly for first time buyers with further interest rate cuts and new 'Help To Buy' style government support interventions to boost the currently sluggish demand side. In addition, there is a need for upscaling in availability and capacity of skills and materials in order to underpin significant increases in additional housing supply.
With New Towns now out of the first Parliament equation, more support for local councils and developers to bring forward sites will surely be needed to hit those big housing targets. There's much that can be done, as HFI's 'How to Build More Homes Faster' and other publications have set out, including technical changes to support partnership investment, as set out in the HFI's A Budget for Housing paper, which was published in March 2024.
Housing Delivery Snapshot - August 2024
• The Bank of England cut interest rates to 5% in a move expected to begin to boost confidence. The close 5-4 vote of the MPC came with a cautionary message that the Bank was not going to cut “too quickly or by too much”.
• Mortgage lender Nationwide released its latest UK house price index report, with an annual growth in house prices of 2.1% in July, its fastest pace since December 2022.
• The latest NHBC housing pipeline figures for Quarter 2 2024 show the scale of the current housebuilding slump with a 23% fall in new registrations compared to the same quarter in the previous year.
• Latest MHCLG data reported a significant fall in residential Planning Permissions over 30%, another key housing pipeline indicator.
• Following the General Election, the new Government confirmed its 1.5 million new homes target for this Parliament.
• The Housing Secretary took immediate action to impose compulsory housebuilding targets on councils, with a warning of direct intervention if housing targets are not met.
• The Housing Minister confirmed on BBC Radio 4’s Today programme on 31 July that the Government’s New Towns programme is not expected to deliver any completed homes this Parliament.
HFI Housing Delivery Newsletter - August 2024
The Bank of England’s rate cut was a ray of light, but the housing pipeline remains a cause for concern. At the Housing & Finance Institute, we look at the latest news and developments in housing since the election, including in the Housing Spotlight and Delivery Snapshot.
Rate Cut Boost
Amid a challenging year for housebuilding and mortgages, there was a ray of light on 1 August, with the Bank of England announcing a long-awaited interest rate cut to 5%. The close 5-4 vote of the Monetary Policy Committee came with a cautionary message that the Bank was not going to cut “too quickly or by too much”.Ahead of the rate rise, the mortgage lender Nationwide released its latest UK house price index report, with an annual growth in house prices of 2.1% in July, its fastest pace since December 2022.
The latest Bank of England announcements will provide a little relief for some current mortgage holders and those needing to refinance. However, many first-time buyers are facing a continuing double challenge of finding money for a deposit while meeting stringent affordability criteria. So while generally mortgage market confidence may begin to rise off the back of the Bank of England interest rate cut, access to home ownership remains difficult for many, given the affordability and home deposit challenges.Housing Pipeline Concern
However, housing pipeline figures remain a cause for concern with the latest NHBC housing pipeline figures showing the scale of the current housebuilding slump. Latest MHCLG data reported a significant fall in residential Planning Permissions, another key housing pipeline indicator.Housing Policy Interventions
Following the General Election, the new Government has confirmed its 1.5 million new homes target for this Parliament. Immediate action has been taken by the Housing Secretary to impose compulsory housebuilding targets on councils, with a warning of direct intervention if housing targets are not met. However, the Government’s New Towns programmes is now not expected to deliver any completed homes this Parliament, the Housing Minister told Radio 4’s Today programme. This raises questions as to how the 1.5 million new homes target will be delivered, without these major new developments coming forward at pace.
Further Government intervention on the demand side to support new buyers and home deposit savers is likely to be necessary over the next period to reverse the current housebuilding slump, together with far-reaching interventions for skills and building materials to meet a housing target that hasn’t been met since mankind first landed on the moon over 50 years ago. The HFI’s purpose is to support increased housing supply, back councils and businesses working together to build more homes and promote new ways to finance housebuilding.
Do get in touch if you would like to share ideas and suggestions on building the homes our country needs.
Best regards
Natalie Elphicke Ross
Head of Housing Delivery
natalie@hfi.org.uk