Government needs to ensure supply gap left by private builders is plugged.
2006/07 saw 219,070 homes completed across the United Kingdom – the most in the past 20 years. Of these, 192,170 were built by private builders. In 2011/12, this figure had dropped to 117,870. It seems unlikely that the likes of Barratt, Taylor Wimpey and Persimmon will be rushing to drive this much higher any time soon, despite recent healthy results. All had their fingers badly burned in the 2008 recession, with banks close to pulling the plug on the first two as their debts mounted and sales plummeted.
Barratt has this week reported its operating margin back up to 8.2 per cent for the year and operating profit up 41 per cent to £191 million. Persimmon earlier this year rewarded the patience of its investors with a £1.9 billion dividend pledge by 2021. It is clearly not in the interests of house builders to meet demand, but they are a crucial part of housing delivery. Government needs to outline its plans now to help ensure councils, housing associations and private rental investors plug the supply gap.