The value of new housebuilding has halved in two years, according to housing industry spokesman Roger Humber, speaking at BMF Members Day.
Humber, a consultant to the House Builders Association, was speaking at the Builders Merchants Federation’s annual Members Day event, held in Warwickshire on Tuesday (September 14).
He pointed out that in 2007, the market was worth £20bn. In 2009 that figure was £10bn. “Even in the supposed boom of 2007 we were not building as many new houses as in previous years,” he said. “In 1988, the number of new homes built in England was 210,000. In 2007 we got 182,000 in the whole of Great Britain. And last year that slipped to just 80,000 with the best we can expect for this year being around 90,000.”
So, even at the height of our most recent house boom, new build and property transaction levels were lower than 10 years previously. However, he also said that the RMI market is holding up. “The RMI market is at least maintaining itself and has got the seeds of improvement in it. It’s the lack of new build that’s a problem”
Mortgage finance has not recovered from the impact of the credit crunch at all and it is this that is restricting demand for housing of all kinds. “Effective demand in the housing market is severely restrained by mortgage shortages. There’s no immediate prospect of the banks getting back into the mortgage market in any huge way any time soon,” he said.
Humber said that the terms of mortgage lending are becoming so severe that there could be a return to the situations in the 1960s and 1970s where “you saw the bank or building society manager and positively begged him to give you a mortgage” – and then only if one had at least a 20% deposit.
So far, the near future of new build housing is not sounding great, he said. “For the first time in 25 years, the Tories and coalition are off the fence and attacking Labour’s lack of housebuilding But there is still a lot of NIMBYism in both parties back benches.
Grant Shapps (housing minister) believes local authorities will be begging for house builders to come in and build, but there is no evidence to support this, Humber said.
“Bottom up, community-led planning raises serious issues for the house builders,” not least because one housebuilder told Humber that the cost per house now of making a planning application was greater than the cost of bricks to build it. “There’s a danger that localism itself could easily become another major source of regulatory cost and burden.”
“House prices have fallen, mortgage supply is not there and we have a planning hiatus. In the short term there will be little improvement. Without price growth, we need the other side of the coin, deregulation, but deregulation is going to be very difficult to do.”
In short, Humber said he believed that any recovery in 2015 will see a house building industry that is much smaller, and which will have to adjust to the new world order.
To see video highlights from Humber’s speech click here