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The number of sites being developed for new homes increased 15% in the second quarter of the year compared to the corresponding period in 2021, the latest data shows.
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Figures from the Office for National Statistics reveal a sharp rise in housebuilding starts in April to June of this year, with 51,730 homes under construction.
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However, the increase came after a major slump in construction levels during the Covid pandemic (2020 to 2021) when the drop in housebuilding levels was on a par with the 2008 financial crisis that adversely affected housebuilders and the housing market. Net increase in dwellings in the UK dropped 11% in 2021-2020 compared to 2019-2020 as construction recovers following the Covid-19 pandemic.
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The latest figures show that the number of completed homes rose 6% compared to April, May and June last year, to 44,940. This was also a 3% increase on the previous quarter.
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Despite the improvement in housebuilding levels, the volume of new build homes being delivered continues to fall well below the UK government’s target to develop 300,000 homes each year.
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The shortage of housing stock continues to place upward pressure on house prices in many parts of the country.
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Residential property prices increased by 15.5% in July, according to the ONS, although analysts expect price growth to ease in the coming months.
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Rhys Schofield, managing director at mortgage broker Peak Money, commented: “If you cut through the numbers that look big on paper, the UK needs to build 340,000 new homes a year until 2031. The Government’s own target is 300,000 a year.
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“These latest numbers all fall well short, meaning that house prices can only be forced in one direction. With the lack of urgency around housebuilding, having a place to call your home is becoming increasingly out of reach for many people.”
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The price of construction materials in the UK is also thought to be having a negative impact on the housebuilding sector. UK construction materials prices in July 2022 were 24.1% higher than a year earlier, according to the ONS.
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Edgar Rayo, chief economist at property finance company Finanze, commented: “These newly released figures highlight the build-cost inflation battering the industry.
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“Soaring construction costs brought about by supply chain issues and fuel price hikes continue to squeeze the profit margins of the UK’s property developers.
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“As we track the imbalance in the housing market, we still observe the very high demand for housing, which continues to put pressure on prices.”
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By MARC DA SILVA
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Source: Property Industry Eye
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