The underlying shortage of homes in England could reach ‘dangerously high’ levels of more than 1m in less than two years, according to David Pretty, chairman of the New Homes Marketing Board.
Pretty, the former CEO of Barratt, said that while the residential property market is likely to remain depressed for some time, it will in due course gradually improve when more mortgage funding becomes available.
This pent-up demand will then be released into a market unable to satisfy the nation’s housing needs and potentially sending prices surging back upwards.
He said: ‘There is a very real possibility that property prices, which have fallen 15% or more, could rise back to 2007 levels within five years. These sort of pressures invariably happen to any market when demand far outstrips available supply.
‘Even before the current recession, national housing production was well below previous decades. Today, we are in a far more difficult situation. The reality is that we are forming households at the rate of around 230,000 each and every year – that is the level we need to meet. But we haven’t built in anywhere near those quantities for many years, so we now have a serious backlog which continues to build up.
‘Back in 2004 the estimated shortage was around 450,000 homes. As we have only been building, at best, an average of around 160,000 per year in the last decade – a figure which is likely to collapse this year and next to around 75,000 a year – the arithmetic is stark: by 2010, pent-up demand for homes to buy, to rent and for social housing could well be over 1 million, and that is dangerously high.’
He said the global credit crunch had now reduced housing output in Britain to the lowest level in living memory, with housebuilders unable to meet even current demand due to the acute shortage of mortgage funds. As a result, they have been forced to make severe cutbacks in production, widespread redundancies and scale back land acquisition and forward building programmes.
He said that fears of huge numbers of unsold housing stock across Britain were wide of the mark. ‘Certain large cities may have quantities of unsold new homes, especially luxury flats, but the evidence is that these amount to no more than 20,000 nationwide. This may seem a large number, but is trifling in the greater scheme of things and they will in any event be sold in due course,’ said Pretty.
Pretty called for a series of measures, some of which have already been adopted, to help first-time buyers, including speeding up the sale of redundant government land, fast-tracking of planning applications for affordable housing, scrapping stamp duty for first-time buyers, and more shared equity and subsidy schemes.
He also renewed calls for the creation of a national ‘home deposit savings scheme’, which would enable young buyers to save for their first home and get a final boost from tax-free bonuses or concessions.
The New Homes Marketing Board was established in 1982 by the House Builders’ Federation, now the Home Builders’ Federation, to promote their activities to consumers.