A bright future for the new build market

While the number of new homes being constructed each year still needs to be increased, there were encouraging signs for borrowers, house builders and mortgage lenders.

We saw lenders opening up their criteria throughout the year, with a growing number of banks and building societies now happy to lend up to 90% loan-to-value on new build houses.

There is increasing competition in the market with more than 20 providers in this space, which means more choice for customers. This includes a variety of building societies, challenger banks and more established high street names.

The Government’s recently produced Net Supply of Housing Statistics, showed total supply for the year to March 2017 was 227,170. Allowing for demolitions, net supply of housing (the Government’s preferred measure) for the year was 217,350 following the fourth successive increase and meaning that since 2013, net housing supply has increased by 74%.

The new build element of net supply increased 12.0% year-on-year to 183,570, taking the increase since 2013 – and the introduction of Help to Buy – to 55%.

But the work is far from done. About 60% of new houses in the UK are built by just 10 companies and more must be done to boost competition. The government has recently announced new cash to boost building in areas of high demand, but the major builders are already operating close to capacity.

However, this shows the government is committed to tackling the housing crisis. Continued political support will be needed if we are to keep increasing the number of new homes.

One key decision is regarding the future of the Help to Buy scheme. This is due to end in 2021 but the government needs to make a decision soon on whether the scheme will be extended in order to give buyers, builders and lenders certainty moving forward.

Another way of improving the number of new homes is to use modern methods of construction, as they can be built far more quickly than using traditional building techniques. There remains a stigma around these kinds of properties we need to move away from the term ‘pre-fab’ and replace with ‘precision engineered homes’ so more needs to be done across the industry to show lenders and consumers that these homes are a viable option.

The general economic situation will, as always, affect the demand for properties but we must ensure that we are building a healthy mix of homes. Whether that is for private rental, affordable and social housing, retirement or owner-occupier properties.