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Developments with over 30% affordable housing have faster build-out rates than schemes with less, research finds
Schemes with a large amount of affordable housing are likely to be completed faster than those with a smaller percentage, according to new research.
Developments with more than 30% affordable housing have the highest average annual build-out rates of any on the market because it taps into an extra source of demand, an analysis by planning consultancy Lichfields has found.
Rachel Clements, associate director at Lichfields, said: “In the current climate, the housing market faces fresh challenges and the urgency for housing delivery is undisputed.”
The findings come as part of annual research by the firm, which is designed to inform planning and policymakers on how best to go ahead with new developments.
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The results reinforce a finding by the Letwin Review into housing delivery, published in 2018, which suggested that increasing the diversity of dwellings on large sites in areas of high housing demand helps speed up the build-out.
One case study in Cambridge was a scheme built predominantly for key workers, which was delivered at a “significantly higher than other similar-sized schemes included in this research”.
However, Lichfields’ research also noted that there is not a direct correlation between affordable housing and fast build-out rates for schemes providing lower percentages.
The firm found that delivery is not consistent as schemes with no affordable housing were completed quicker than those with 10 % to 19% affordable.
For the schemes that provided 10% to 19% affordable housing, these had the lowest average build-out rates.
The research also pointed to a slowdown in build-out rates across the industry, particularly on schemes of 2,000 homes or more. This is largely driven by stagnating housing market conditions linked to spiralling mortgage rates and subsequent reduced demand, the report found.
More broadly, the report showed that the biggest overall driver of build-out rates is still industry demand, which is expected to recover in the coming years amid a “common belief that interest rates have peaked and mortgage affordability will improve in 2025”.
The report said: “The absorption rate of the local housing market dictates the number of homes a builder will sell at a price consistent with the price they paid for the land.
“Areas with a higher demand for housing (measured by higher affordability ratios, of house prices to earnings) had higher average annual buildout rates than lower demand areas.”
The latest research by Lichfields comes as a another thinktank found that Britain’s housing stock offers the worst value for money of any advanced economy, with homes being smaller and older than that of many countries.
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