Posted by: Jules Birch18/11/2010
The good news: housing starts are back above 100,000 a year for the first time in two years. The bad news: that could be as good as it gets.
Today’s housebuilding figures from the DCLG show a recovery since the dark days of late 2008 and early 2009, when the 12-month rolling total of starts hit a low of just 68,000.
However, the June-September 2010 quarter also saw the first significant fall in starts since the start of 2009. The total of 25,870 starts was down 9% on the April-June quarter though still up 13% on a year ago.
So is this just a blip or is there worse to come? Unfortunately, starts fell both for private housebuilders and housing associations.
No matter what the government says about 155,000 new affordable homes, it’s hard to see that a 60% cut in the new homes budget can lead to anything other than a fall in starts by associations over the next few years.
In the coalition’s dreams, the public spending cuts will lead to a recovery in the economy and in private housebuilding. However, the cuts seem to be having the opposite effect so far.
Among other builders reporting results this week, Barratt Developments said the Autumn selling season had been weaker than expected. It blamed falling confidence in the run-up to the spending review in October and continuing constraints on mortgage lending (today’s CML figures show the lowest total for gross mortgage lending in 10 years).
Meanwhile, the planning system for new homes was is in chaos following the government’s High Court defeat over scrapping regional strategies and the new system and new homes bonus are still some way off.
Completions of new homes are still rising but they are based on decisions that housebuilders made several months ago. The signs do not look good further back in the chain.
From Inside edge
Housing commentator Jules Birch puts the latest news in context