Collapse in new housebuilding heaps pressure on ministers

Only 29,800 new housing starts in England in the final quarter of 2014

Ben Chu
Friday 20 February 2015 02:18
More homes were built in 2014 compared to previous years
More homes were built in 2014 compared to previous years

The number of new homes being built collapsed in the second half of last year, official figures showed yesterday. The news will be a grave embarrassment for ministers who have been claiming that the construction industry is booming and that housing supply is finally coming into line with demand.

There were only 29,800 new housing starts in England in the final quarter of 2014, the Communities Department reported. That represented a 10 per cent decline since the third quarter and a 20 per cent fall from the 36,770 homes begun in the second quarter. The quarterly figures are now just 4 per cent above the 28,630 housing starts reported in the first three months of 2013, when George Osborne announced his Help to Buy subsidy scheme.

As recently as September, the Chancellor boasted that Help to Buy was “driving a big increase in housebuilding in Britain, boosting the construction industry and increasing housing supply”.

But The Independent revealed earlier this month that Treasury experts had warned ministers in early 2013 that Help to Buy would have little impact on housing supply. The International Monetary Fund also predicted that the mortgage subsidies would merely push up prices rather than boosting construction.

Brandon Lewis, the Housing minister, yesterday pointed to the fact that the total number of new homes begun in 2014 was 10 per cent higher than in 2013 – but he ignored the sharp fall in the second half of the year. “We inherited a broken housing market in which builders could not build, lenders would not lend and buyers could not buy. Today’s figures show we are on track and turning this around,” he insisted.

But Campbell Robb, of the housing charity Shelter, said the figures showed that the Government was failing to address the construction crisis. “While a small increase in the number of homes built might be heralded as a success, the real story here is the shocking fact that we are building just half of the homes we need in England,” he said.

A breakdown of the statistics shows that a massive drop in construction by housing associations helped to depress starts. Housing associations started 4,280 properties in the final quarter of the year – 36 per cent less than in the second quarter. However, private housing starts were also down 15 per cent in the second half of the year. The total number of homes begun in 2014 was 136,120 – up from a low of 86,180 in 2009 but still well below the 250,000 that are needed each year to meet rising demand.

Treasury advice from 2013, when the Help to Buy policy was being formulated, predicted that the equity loan element of the scheme would have “a limited impact on housing supply since most of the sales are likely to be for homes which would have been built anyway”.

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