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The British are obsessed with house prices.Residents in densely populated areas often resist new housing development, fearing it could damage values
Planning approvals for new housing projects in England are at their lowest quarterly level in 15 years. The Not in My Backyard (Nimbi) brigade may have considered this a victory for local democracy. But the depletion of planning in England is only accumulating problems.
Housing experts have expressed doubts that England will be able to meet its target of building 300,000 new homes a year by the mid-2020s. Housebuilders are seeking permission for homes to be built from 2025 onwards. This suggests that supply constraints are worsening.
The number of housing projects approved in the UK fell to 2,456 in the second quarter, down 20% from the same period last year, according to lagging data from the House Builders Federation. That was the lowest quarterly level since the trade body and research group Glenigan began collecting the data in 2006.
The number of homes approved in the UK fell 13% year-on-year in the second quarter to just over 54,200. The total over the past four quarters is 265,223. Homebuilders are scaling back new projects due to falling sales. Higher lending rates and the removal of the UK government’s Help to Buy subsidy for first-time buyers also played a role.
Last year, the government proposed giving local communities a greater say in development in their areas after some government MPs threatened rebellion. Ministers had hoped to scrap EU-era rules aimed at protecting England’s waterways. These often hinder builders’ new housing plans. But the plan was defeated in the House of Lords of the British Parliament on Wednesday amid strong opposition from environmental groups.
Valuations of the UK’s largest housebuilders have recovered from last year, when Help to Buy stopped accepting new loan applications. But it is still some way off the levels reached in the middle of the past decade.
Currently, investors are more worried about declining sales. They hope that a game of brinksmanship between political parties on housing may encourage alternatives to Help to Buy.
Relaxing planning controls or introducing a development land tax are radical solutions that could break the deadlock. Neither major political party is willing to accept the unpopularity that comes with such measures. Restrictions on housing supply remain part of England’s political system.
The Lex team is interested in hearing from more readers. Let us know if you think there are ways to improve the supply of new homes in the comments section below.
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