When it comes to presenting wishes for the year ahead, many property market stakeholders will (quite rightly) point towards the supply of new homes and ‘request’ a significant increase in the number of – what the statisticians call – new dwellings right across the UK.
There’s essentially a very good reason for this – for as long as I can remember demand has outstripped supply by a considerable margin, and the oft-quoted figure of ‘250,000’ new homes per year just to stand still, seems to be a fair reflection of that. And that’s without catching up on all those years when 250,000 new ‘dwellings’ was a target which was missed by a considerable distance.
So, where are we currently? Well, the latest figures – and of course we should bear in mind the unique circumstances of 2020 – are not too bad. Between April 2019 and March 2020 there were 243,770 net additional dwellings completed according to Government statistics.
For Q3 last year, 45,000 dwellings were completed which, unsurprisingly given what occurred in the previous quarter, was a 185% increase – that said it was still the first quarter since Q3 2019 when dwellings completed had gone up. The perhaps more interesting figure, which we await, is the total number completed between March last year and March this year; given the fact the housing market was completely closed down for two months last Spring, will we get anywhere close to that 250k mark?
What we do know however is that, whatever level of new-build homes that are brought to market, there is unlikely to be a shortage of buyers for them, especially given the varied ways, means and schemes by which purchasers can secure these new properties.
And, lest we forget, this is a sector of the market that has seen its fair share of turbulence over the past couple of years. The building of leasehold houses, and the potentially onerous leasehold terms that might have come with them, have been a real bone of contention. Not forgetting of course the whole issue of cladding which has not just been significant for older properties, but any property built relatively recently that might require remedy.
So, you might have thought there was some reason to suspect new-build properties, and the demand for them, might suffer slightly. However, that’s not been the case and certainly the Government action that has been taken, particularly with regards to banning the sale of leasehold houses is welcome. Instead, there is plenty to suggest that the demand for new-build homes, with their energy efficiencies, their reduced running costs, their reduced maintenance, their potential development perks, etc, has never been higher.
A point that has been made around the importance of maintaining and growing the number of new-build properties in the UK, is to do with that consumer demand. Not specifically consumer demand to own a home, but specifically consumer demand to own a brand-new property. For many more people now, it’s a new-build or nothing. That brings with it more challenges and more pressure to bring larger numbers of new dwellings to market.
Certainly, the ‘feel’ around the housing market is that, with the success of schemes like Help to Buy this has engendered a growing demand for new-build over what we might call, second-hand properties, particularly amongst first-timer buyers. Hence, this is perhaps why demand for new-build remains very high and why the next iteration of the Help to Buy scheme – which will start in April this year – is only for those making their first steps onto the housing ladder.
It also makes our job as surveyors and valuers of new-build property incredibly important. There is always plenty of talk around so-called new-build valuation premiums but the facts of the matter are that valuers have a duty to report the value of a new-build home as they would for any other property. Again, there is often a discussion of first-owner benefits that may determine a valuation but really they vary a lot, and you wouldn’t be able to define them as any percentage of the selling price. It’s an issue surveyors should use their judgement on and approach with care.
Overall, the new-build market in the UK will remain a highly important one for all property stakeholders – without the requisite levels of new supply we will continue to see a big disparity in turning the numbers who want to own into owner-occupiers. And given that first-timers are much more likely to be purchasing new-build, we also need a strong supply in order to keep all other levels of the housing market moving.
Simon Jackson is managing director at SDL Surveying