"The housing crisis is a massive issue that will require a huge amount of focus."
Jamie Johnson, CEO of FJP Investment
The Government recently announced its plans to build a million new homes over the next five years. While this may sound like a significant amount, some analysts suggest it is not enough — and that 300,000 new properties are needed each year by the middle of this decade.
Whatever your view on the specific figures, the direction and ambition are encouraging. Where questions do remain, however, is concerning how these homes will be built within such a short timeframe.
National Infrastructure Strategy
The National Infrastructure Strategy (NIS) does provide some encouraging signals. The result of the National Infrastructure Assessment (conducted by the independent National Infrastructure Commission) lays out various areas the government may invest in to boost the construction sector. Likely to be delivered soon after the 2020 Spring Budgett, it focusses on an array of areas, from decarbonisation to digital infrastructure, and promises more than £100 billion of investment over the course of this parliament.
It would have various positive knock-on effects for UK housebuilding. Growth in regions of the UK that the Conservatives have mentioned ‘levelling up’, such as the North East, could be accelerated. Whilst this is a long-term trend that is already emerging — the West Midlands saw house price growth of more than £35 per house per day in 2019 — better infrastructure, such as HS2 and HS3, would help spur it on further.
However, the investment proposal is not without faults. The housing crisis is a massive issue that will require a huge amount of focus, and so our collective attempt to address it could suffer from a lack of focus if it simply represents a small component of wider infrastructure investment.
Similarly, the £250 million for 20,000 new homes is a welcome first step, but the plan does not compare to the scale that is needed to trigger a new-build revolution. Further still, the Government is yet to outline how precisely these dwellings will be built.
So, what can the government do?
There are some positive signs. The surprising departure of Sajid Javid was admittedly frustrating for a sector fatigued by change (there have been 19 housing ministers since 1997). However, there is a chance his successor Rishi Sunak will attempt to tackle housebuilding with a renewed vigour.
Furthermore, the Conservatives have previously suggested housing policies that many in the sector find appealing. According to research conducted by FJP Investment, as many as 70% of property investors support the proposal to raise stamp duty on international buyers, with a view to creating more affordable domestic stock. Similarly, a large proportion (68%) agree with their plan to involve more local people in the planning of new build developments.
The upcoming budget will provide Boris Johnson an excellent opportunity to implement these kinds of changes. Whilst the NIS may also help augment housebuilding construction, to spark a new-build revolution a major focus purely on the property sector will also be desperately required.