Jonathan Rolande - More To Be Done To Address Housing Imbalance

A recent announcement by housing giants Persimmon has been heralded as a welcome boost to the property sector. In a trading update they indicated they were on track to complete 10,000 homes in 2024. 

During Q1, its net private sales rate per outlet rose 6% on Q1 2023. Excluding bulk sales, this dipped to 0.61. The firm said it had traded in line with expectations, completing 1,027 homes, down slightly on Q1 2023’s 1,136.

It has echoed recent statements by Taylor Wimpey regarding improved levels of site visits so far this year.

We should welcome news that sales are up, but we shouldn't overdo it. Comparing prices and interest levels to the time not long after the Truss Budget, which was the catalyst for rocketing mortgage rates and lost confidence, shows that the bar was pretty low.

The most encouraging part of the statement is the fact that trading in recent weeks has been brisk, with a robust visitor number and enquiries making Persimmon confident for the remaining part of the year.

This confidence is vital because many more sites would be mothballed without it to avoid oversupply. 

This is the great quandary of our property market – for-profit companies must build sufficient homes to house the population, whilst not building so many that scarcity is lost and buyers are in the driving seat. Sadly, that prospect looks a very long way off right now. Supply remains far too low and we still need to encourage builders to turbo-charge construction levels to address the imbalance which exists. 

If more, many more, were built, prices and rents would be less volatile and gradually, our housing stock would become better value for money.

But there is a deeper issue here too. 

With only about 2% of the UK built-on, there is frankly no shortage of land to build. The real problem is with the planning system that delays and blocks applications, the willingness of private companies to build homes in a difficult market and the profit margin expected for land and new home sales that inevitably pushes up the price. 

Housing is one of the most difficult issues the Government faces right now, but failure to do so will be immeasurably worse. Tackle it properly and we will genuinely have something to build on in the future.

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