Homes must be built in ‘right’ parts of England to tackle shortages – think tank

The Government must make sure that homes are built in the “right” parts of England as it looks to meet its ambitious housebuilding targets, a think tank has urged.

It will need to both hit and sustain its target of creating 1.5 million new homes at least over this Parliament and the next to ease pressures on the private rental sector and temporary accommodation, the Resolution Foundation said.

The authors argued that the Government faces a trade-off on whether to focus efforts on areas that are least affordable, or those that have the greatest productivity potential.

Some places, such as London, Oxford and Cambridge, “tick both boxes”, the foundation said.

Areas such as Greater Manchester and Birmingham with “huge productivity potential” hold the key to boosting economic growth, according to the think tank, which is focused on improving the living standards for those on low to middle incomes.

It argued that these areas should be prioritised over “pricier areas with low productivity potential”.

The foundation argued: “These major cities may be relatively affordable now, but housing demand and cost pressures will increase as productivity grows if housing stock doesn’t keep pace.”

The Housing Outlook report also indicated that hitting the Government’s target of 1.5 million new homes in England over this Parliament – equating to around 300,000 new homes per year – would arrest a recent decline in Britain’s housing stock relative to its population.

The number of homes per 1,000 adults in England would rise from 535 in 2024 to 543 by 2029, roughly the same level as 2021, the foundation said.

Imogen Stone, researcher at the Resolution Foundation, said: “The Government has set itself a hugely ambitious target of building 1.5 million homes over this Parliament.

“If this level of new homes could be sustained over the next decade, it would help to reduce housing cost pressures, but on its own still won’t be enough to deal with Britain’s wider housing woes.

“Britain’s affordable housing stock relative to its population has been falling for five straight decades.

“The welcome £39 billion Social and Affordable Homes Programme will need to deliver in full, and the private sector will have to step up, if we are to end this decline.

“Britain will also need to build these new homes in the right places.

“Targeting the building of private and affordable housing is crucial – not just in expensive areas, but in rapidly growing ones too like Birmingham and Manchester which hold the key to boosting economic growth.”

On Friday, property website Zoopla said its analysis indicates a “north-south divide” in the viability of home building.

Zoopla said higher sales values of new homes in southern England are supportive of development viability, compared with the Midlands and northern England where sales values are lower relative to the costs of delivering new homes.

The website suggested deploying new funding for affordable housing “quickly and strategically” to enable housing associations to acquire new homes.

It also suggested more targeted support for first-time buyers “to boost demand without inflating prices across the board”.

Richard Donnell, executive director at Zoopla, said: “The Government can’t control the price of raw materials like bricks or concrete, but it can influence the rising costs of new regulations.

“While recent planning reforms and affordable housing funding are positive steps, they are not a complete solution to boosting new home building.

“Further reforms are needed to boost capacity and speed at the local planning level and new funding should be focused on immediate, not long-term, delivery.

“Direct support for home buyers could help, but if deployed, requires careful targeting.

“Builders also need to ensure they are marketing homes as efficiently as possible. Affordability pressures are making people look further for their next home, especially in the new homes market.”

Meanwhile the National House Building Council (NHBC), a warranty and insurance provider, highlighted the importance of workforce skills and said it is widening its apprenticeship training network.

The NHBC’s chief operating officer David Campbell is expected to warn that urgent action is needed in a speech on Sunday at The Big Construction Reception.

He is expected to say: “Without a significant increase in the workforce, scaling up the volume of quality new homes will be incredibly challenging,” adding: “We must get moving now. You can’t create a skilled workforce overnight.

“At NHBC, we’re committed to being part of the solution. That’s why we’re heavily investing in practical, long-term training initiatives to help build the skilled workforce our industry urgently needs.”

A Ministry of Housing, Communities and Local Government spokesperson said: “We are leaving no stone unturned to build the 1.5 million homes this country desperately needs.

“On top of the major planning changes we have already introduced to get developers building, we are going further and faster to accelerate reforms and bring about the biggest era of housebuilding in our country’s history.”