In a hope to boost the economy and the construction industry, last year the Conservative government pledged to build 1 million new homes in the UK by 2020. Recent figures however show they are set to fall well short of that figure.
The housing market is a key indicator in economic performance – it has become so ingrained it’s considered as one of the larger influences of an economy. It comes as no surprise then that various political factors such as the EU referendum in June can take their toll on the housing market. In the three months before the referendum, construction had started on more than 36,000 homes. This represents a 6 percent increase over the same period last year.
However, the rise we see is not down to government influence – but private house builders. Figures show that projects by housing associations and councils fell nearly 12 percent, while projects by private house builders increased a significant 10 percent.
If construction continues at the same rate, the government would fall short of their target by 250,000. To make up that deficit, an additional 1,200 homes would need to be constructed per week. At the current rate, the 1 million target would not be hit until the end of 2022. With the next general election being held in 2020, this will not help their campaign for re-election.
The last serious housing crash occurred in the 1990s, many smaller and private house builders went out of business as only the larger firms we able to weather the economic storm. Property advisers Savills’ research suggests that if we had a similar number of smaller property builders as we had in 1991 we could build an additional 35,000 homes a year.
While this may not be enough to achieve the 1 million target, it would mean the government would only fall short by around 75,000 homes – a figure much easier to swallow.