200,000 new homes a year seen as unachievable target by UK house builders

LONDON: Only 6% of house builders believe that the government’s key target of 200,000 homes to be built every year is deliverable, according to the latest Knight Frank Housebuilding Report 2014 — Building Momentum.

The majority of house builders believe that construction of new homes is expected to rise next year by more than 10%, with more than a quarter expecting an uplift of more than 25% in start volumes.

Despite this, majority of house builders still believe that 200,000 new homes a year is an unachievable figure. About 76% is of the view that 180,000 is the maximum and only 6% sees that exceeding 200,000 on a regular annual basis is achievable.

“The question of whether it is feasible for house builders to plug the housing hole left by the relative lack of government investment remains a primary concern,” said Knight Frank’s head of UK research Grainne Gilmore.

“There is no doubt that developers have stepped up activity since the zenith of the financial crisis — official data show completions in England rose 4.5% over the last year. But this still leaves development some way off the levels needed to meet demand in the UK.

“Our survey suggests, however, that development volumes will continue to rise. It is just a question of whether it is going to be enough to meet the 200,000 target,” she said.

The report also highlighted the reliance on the government’s Help to Buy Scheme in achieving the figures. The launch of the Help to Buy Equity Loan in April last year had boosted interest in the new-build sector.

Knight Frank’s report was based on a survey of over 100 respondents from the UK’s largest, medium and smaller house builders across a broad geographic spread.

This article first appeared in The Edge Financial Daily, on May 30, 2014.

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