Orders please

Can housing associations step into house builders’ shoes and deliver more new homes? Not if new figures out today are anything to go by. 

The stats on new orders in the construction industry reflect the slump in private housing, with orders over the last three months down 55% on a year ago. So much, so obvious, but they were actually up a modest 5% on the previous three months.

But orders for public and housing association homes have also fallen off a cliff. The total for the last three months was 45% down on a year ago - almost as great a fall as in the private sector - and 43% down on the previous three months.

New orders reflect work that is in the pipeline and work their way through into construction output and then into housing starts and completions. So the signs are alarming for next year.

It wasn’t meant to be like this. The Homes and Communities Agency (HCA) was meant to usher in a new era of house building to help meet the government’s target of 3m new homes by 2020.

Instead, the HCA’s first two months (December and January) saw the lowest new orders for public housing in any two-month period since 2000. The housing budget then was still suffering from Labour sticking to Conservative spending plans in its first two years. 2000 as a whole was the second worst for new public housing orders in the last 25 years whereas 2009 is meant to be one of the highest. 

While one month’s figures might be dismissed as a blip, clearly something worrying is happening when they send out the same message three months in a row. It’s possible there may have been a hiatus as the Housing Corporation gave way to the HCA and that all those plans we keep hearing about will come through soon.

It’s also possible, as I’ve mentioned before, that the fall in new investment is the result of funding being diverted into buying unsold homes from the private sector (and from housing associations themselves). 

The HCA itself puts the fall down to the market downturn, with work stalling on mixed sites of private and affordable homes that are funded through section 106. However, those orders have already been placed. We are talking here about schemes that are only just going on to the drawing board.

The fall in orders coincides with the sudden change in lenders’ attitudes to housing associations in the wake of the collapse of Lehman Brothers in October and with the mounting realisation that associations will be forced to write down the value of land acquired at the peak of the market and their development model is ‘broken’. 

But it’s becoming clear that it’s more than just the cross-subsidy of rented homes through shared ownership that no longer works. New mechanisms are needed - and urgently - to turn increased government investment into bricks and mortar.