UK housebuilding shortfall a warning for Australia
The UK’s failure to meet its housing targets highlights construction and supply chain limits that echo challenges in Australia, new research suggests.
ANTHONY Albanese’s Labor government must be glad they’re not in the same boat as Keir Starmer’s Labour government when it comes to housing.
A new forecast for housebuilding targets shows the issue of shortfalls is not unique to Australia – and much worse in the UK, judging by a report by Savills
The real estate consultant has just released research suggesting the Labour government’s target of 1.5 million homes by 2028/29 will be well wide of the mark – with 840,000 new homes in the next five years.
While there are many differences between the two countries’ housing dilemmas, there are clearly lessons to learn, especially when it comes to construction capability.
Dan Hill, of the Savills, said: “Based on current policy and trends, housing completions are likely to remain low, between 160,000 and 170,000 per year over the next few years.
“While it is possible to exceed this, demand support would be needed.
“Even with this, delivery will be constrained by the speed at which the housebuilding sector can expand its supply chains and labour force.
“This means completions are still likely to fall short of the Government’s target.
“At most, we think very significant demand support could push completions to 1.2 million new homes by March 2029.”
The Savills report goes on to note that planning reform has reduced barriers to increasing the supply of new homes, but further measures are required, focusing on increasing demand.
While the government has shied away from questions around reintroducing the Help to Buy scheme – which was successful in supporting more than a third of all new home sales since its inception in 2013 – house builders are clamouring for that kind of support.
Even with a Help to Buy scheme that would support tens of thousands of completions per year, other supply-side factors persist.
“Even with funding allocated to new homes, there are limits to the speed at which housing completions can expand, due to workforce and supply chain constraints,” the report says.
“Over the last 50 years, in years when housebuilding has been growing, the average rate of expansion has been 7.7 perf cent per year.
“When supported by the Help to Buy scheme, the rate of expansion in the mid-2010s was 10.8 per cent in 2013 and around 15.7 per cent in both 2014 and 2016.
“If housebuilding capacity were to match this peak rate of 15.7 per cent per year for the next four years, we could see an additional 350,000 homes completed by 2028/29.
“This would mean total delivery of 1.2 million over the five-year period, still short of the 1.5 million homes target. But this would rely on large scale demand support being put in place.”
