In
overall terms, the housing market in the UK has experienced a
period of strong growth in the 5 years to 2007 with 230,000 houses
started in 2006 and 224,000 completed in 2007. The volume of newly
constructed flats also reached a peak in 2007 at 99,000 in the UK
– about 44% of total new family housing. In England, the share of
flats also reached a high in that year with just over 82,000 flats
constructed. However, in the last 2 years there has been a severe
decline in flat volumes to an estimated 57,000 in England and
67,000 in the UK in total in 2009.
Latest official figures available up to mid-2009
show no decline in the share of flats within the residential
housebuilding market, but this has been changing since mid-2009
and into 2010. Some of the major housebuilders have recently
started to reduce the share of flats they build in favour of
family housing indicating that many of their customers prefer
houses to flats and the extra floor space they can obtain.
The share of newly constructed flats in England
reached 50% of all family housing in 2008, however it is expected
that this share will begin to fall to an estimated 42% by 2014
though is likely to regain share in the longer term.
The volume of newly constructed flats in the UK has
declined from a peak of about 99,000 in 2007 to an estimated
67,000 in 2009 and is likely to experience further decline in the
short term if:
-
There is lack of sustained or
substantial recovery
and growth in the housing market.
-
There is an existing
over
supply of flats with many lying empty – particularly in Northern
urban England..
-
The major housebuilders
prefer
to change their ‘mix’ to favour family housing rather than flats
which in turn will increase their margins and are easier and
quicker to sell.
It
is expected that the volume of flats will decline to about 50,000
in 2010 – around 50% of the 2007 figure and share in the UK could
fall from 46% of all housing in 2008 to 39% in 2012. In the medium
term, demand for flats will recover more strongly as fundamental
drivers begin to impact on the market.
The targets for new housebuilding in England, set
in the 2007 CSR (Comprehensive Spending Review), are:
-
2 million new homes to be built by 2016.
-
A further 1
million homes to be constructed in the 4 years to 2020.
The proposals assume that, by 2016, housing supply
will rise over time towards the 240,000 per year target and remain
at that rate for the following 4 years to 2020. Within this, a
minimum of 70,000 new affordable homes were to be built each year
by 2010/11, 45,000 of which should be social rented homes.
Given the rapid decline in housebuilding activity
in 2008-09, these targets are now generally recognised as
unachievable. However, in general, demand continues to outstrip
supply and this will support the longer-term growth of the overall
housebuilding sector. The focus is expected to increase on the
‘affordable’ homes sector and smaller homes and apartments in
order to address the supply and demand mis-match.
The
outcome of the forthcoming Election will shed some light on the
future direction of the sector. While policies on housing are
unclear, the Conservatives seem destined to allow greater freedom
to local authorities to control their own housing requirements by
abolishing RDAs. However, in the longer term, no matter which
Party gains power, the fundamental problem of a shortage of
housing supply will need to be addressed and a large—scale
programme of new build implemented – with flats representing a
cornerstone of plans.
