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Social housing starts plummet in Q4 2014

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The decline of social housing starts in England and Wales continued in the last quarter of 2014, new figures reveal

According to the latest Glenigan Residential Index, the 11 per cent drop in social housing starts in the fourth quarter of last year dragged down the growth rates of the residential sector as a whole. The drop comes after a huge growth of activity in the area in 2013.

Commenting on the figures Glenigan economics director Allan Wilén said: ‘After a flurry of social housing projects in 2013, there has been a marked decline over the last year in the number of projects being brought forward by social housing providers under the Government’s new funding regime.

‘The value of social housing projects starting on site during the final quarter of 2014 was 11 per cent down on a year ago. Furthermore, with detailed planning approvals down by a quarter against the final three months of 2013, the deterioration in starts appears set to persist into the New Year.’

The slowdown in starts is part of a trend which saw applications for social housing projects fall in 2014 due to cuts in government funding.

Figures released in October by the Department for Communities and Local Government showed that the number of new social housing schemes for rent in England plummeted by 71 per cent in two years from 37,690 in 2012 to 10,840 this year.

however other figures released by Glenigan showed that stamp duty reforms announced in the Autumn Statement had given the housing market a mild boost.

Wilén added: ‘The changes are also likely to push average house prices higher, as stamp duty savings improve affordability. Both of these factors would support further uplifts in the rate of private housing starts during 2015, though improved household finances and greater mortgage availability will be the more critical drivers.’

Private sector housing starts rose in Q4 of 2014 following a poor performance in Q3. The final quarter saw a 7 per cent rise in starts, which led to 15 per cent increase for 2014 as a whole. The combined value of residential starts during the fourth quarter of 2014 were flat on a year earlier, although the year as a whole saw expansion of 8 per cent.

The non-residential sector is up 4 per cent, led by double digit growth of the office and industrial project starts, however a 14 per cent drop in civil engineering activity cancelled out this rise, meaning the value of projects starting on site during the three months to December, is flat on a year earlier.

The monthly Glenigan Index is based on extensive research of every construction project starting in the UK over the previous three-month period, providing an indicator of developing activity and future output in the industry.

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Readers' comments (1)

  • It's not just cuts in government funding that have ensured this drop, drastic as they have been. It's also the convenient 'viability' clause in the 2013 Growth & Infrastructure Act which allows - encourages even - any developer to say any development would be unviable if it had to include any affordable component. This applies even when a scheme was given consent on the strength of its social/affordable component. Many schemes only get through planning committees because of the desperately needed social housing, usually promised to comply with the LPA's policies. But without being obliged to disclose the confidential economic assessment, so without public scrutiny, the developer then contrives to ditch all or most of the social/affordable housing. Or, in cases like Earl's Court or the Heygate Estate, the LPA agrees a derisory percentage of social/affordable, in contravention of its own adopted policies, at the outset. It might be reasonable in areas of low house prices - which probably still have a large amount of social housing anyway - but it's unbelievable in London and the SE. If ever there was a reason for cleaning out cosy compliant local authority planners, its this.

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