Four out of five of the country’s developers expect to ramp up the delivery of new homes in the coming year.
That’s the key finding of Knight Frank’s 2018 New Homes Construction Survey, which is due for publication today.
A combination of rising house prices, improved access to finance and the introduction by Government of the ‘Help-to-Buy’ scheme has served to buoy the confidence of developers to the point where 80pc of those surveyed by Knight Frank for its report expect to increase their output over the next 12 months.
When ranking the biggest obstacles to new construction, the survey shows that low residential prices have fallen from first position in last year’s report to fifth this year, suggesting that prices have now increased to a level that developers believe makes construction viable.
The availability of funding for residential development has also increased, with 67pc of those surveyed by Knight Frank saying they believe that access to finance has improved in the last year.
The survey revealed that 76pc of respondents believe that the ‘Help-to-Buy’ scheme has supported an increase in new homes construction by making sites in certain locations more viable.
But while pricing and a lack of funding are no longer proving to be impediments to the delivery of new homes, a lack of suitable sites is now being cited by developers as the largest obstacle to construction. In the absence of such sites, an increasing number of developers have begun acquiring lands without planning permission in place. While a not-insignificant 30pc of sales fell into this category in 2016, Knight Frank’s latest survey suggests that this proportion has ballooned to 50pc as developers and their funders pin their hopes on securing planning after purchasing lands.
76pc of the survey’s respondents said they don’t believe that the Government’s decision to increase the vacant site levy will drive the development of vacant sites. While 17pc of those surveyed said simply that the measure would have no effect on developer behaviour, 59pc said there were a variety of reasons as to why vacant sites remained undeveloped. On this, one developer said: “Services, infrastructure and planning delays are also issues in developing vacant sites.”
Interestingly, the UK’s decision to leave the EU is being viewed by a growing number of developers as being good for the new homes market, notwithstanding the additional pressure that an influx of workers from London and elsewhere would place on residential supply.
Commenting on the positive sentiment towards Brexit, Even Lonergan, director at Knight Frank, said: “Driven by the continued resilience of domestic economic growth coupled with high-profile office relocation announcements, 44pc now believe Brexit will boost new homes construction activity, double the number in last year’s report.”