Figures illustrate the challenge the new Government faces - and the need for more positive policy interventions.
The Home Builders Federation’s latest Housing Pipeline Report, covering the period to June 2024, finds that the number of units and sites gaining planning approval have continued to plummet for yet another quarter. The data, supplied by Glenigan, finds that the 12 months to June saw the fewest new home permissions granted for over a decade, illustrating the scale of the challenge the new Government faces as it looks to increase housing supply. Whilst the speedy progress made on planning policy is welcome, further interventions in other areas, in particular to boost demand by helping people to buy will be needed.
As a result of the previous Government’s approach to house building, in particular with regards to planning, the number of permissions for both building sites and actual homes in England have been on a downward trajectory for the last two years. Record lows have been hit in each quarter. In the last 12 months, just over 230,000 units were granted planning permission, the lowest figure for any 12-month period in the last decade.
Looking back to the late 2010s, when housing supply was at its peak of around 240,000 homes being delivered a year, the number of homes receiving planning approval in a 12-month period was consistently around 100,000 higher (45%) than today.
The report also found:
- 10,400 sites were approved in the year ending June 2024, the lowest figure for any 12-month period since the report began in 2006.
- This is a 10% drop on the same period last year, and a 53% drop on the peak in 2008. This is also a 7% drop on the previous quarter and a 9% drop on the same quarter last year.
- The number of units being approved also reached a record low. 53,379 units were approved during Q2 2024, the lowest quarterly figure since 2014. This is a 3% drop on the previous quarter and a 13% drop on Q2 of 2023.
- The drop in approvals was more severe in certain regions. In London, units approved dropped 20% on the previous quarter and by 42% compared to the same quarter last year. At 6,159, the quarterly total was the lowest since 2012 and at 40,466, the 12-month total was the lowest since 2013.
- The North East and East Midlands also saw significant drops compared to the same period last year, at 50% and 42% respectively.
The industry has welcomed the recent announcements from the Government to reform and speed up the planning process, and reverse the damaging anti-development changes made to the National Planning Policy Framework – the planning system - by the previous government, including reinstating the requirement for Local Authorities to plan for the number of homes their communities actually need.
However, despite these very positive and swift interventions, the report illustrates that the scale of the challenge that remains is huge. Planning permissions will need to increase by 55% to reach the Government’s new annual target of 370,000 new homes.
To achieve this and meet its housing supply ambitions, it is also paramount that the Government’s reforms go beyond just the planning system. The increasingly unaffordable cost of home ownership is stifling the market and it is the first time in decades there is no government support in place for aspiring home owners. The industry needs a level of confidence in demand to commit to make the significant investment in land, planning permissions and people needed to build more new homes.
Whilst 160,000 homes remain stuck due to nutrient neutrality restrictions. The industry is heartened by ministers talk of solutions but the details need to be brought forward as soon as is practicably possible.
Neil Jefferson, Chief Executive at HBF said: “The steep fall in planning permissions starkly illustrates the challenge the new Government faces to boost housing supply. Whilst the speedy interventions on planning are very welcome, there are a number of determinants on housing supply levels.
“The lack of affordable mortgage availability means more support for buyers is needed. Creating demand for new homes provides the confidence the industry needs to invest and deliver both private and affordable homes.
“Building the homes we need will generate hundreds of thousands of jobs, create investment in communities and economies in every region and deliver the growth the country desperately needs.
“The upcoming budget provides an opportunity for the Government to take more positive steps to address the mounting housing crisis and to commit to their pledge to get Britain building again.”
Download the Housing Pipeline report in full at hbf.co.uk/policy/policy-and-wider-work-program/new-housing-pipeline