Why Aren’t More New Houses Being Built?

Is there a housing shortage?

Why Aren’t More New Houses Being Built?

Look virtually anywhere in the media and you’ll see reports that suggest that there is a housing crisis in the United Kingdom. It’s resulted in increased house prices even whilst we all feel the crunch over the confusion around Brexit. It means that young people are finding it almost impossible to even think about buying their own home any time soon.

Of course, knowing that there’s a problem isn’t the same thing as knowing why. Most people accept that there aren’t enough houses and even more people would point to the lack of affordable houses as being a big issue, but getting an answer as to the why’s and wherefores of that is entirely different matter. As is so often the case, there’s more than just one answer to that particular question.

Brexit Is Removing Workers

Whatever your opinion on Brexit and how the government is handling it, there’s little question that is has created a hostile environment for people that are not originally from the UK. Immigration was one of the biggest issues during the referendum in 2016, with many feeling that removing freedom of movement would be vital to rescuing the NHS and ensuring that more of our own money goes back into the economy.

That may be a simplistic and false way of looking at things, but that doesn’t change the fact that many eastern Europeans and others that would typically be part of the housing work force no longer feel welcome in the United Kingdom. That is being compounded by the fact that companies are choosing to opt for subcontractors rather than direct employees, with the logic being that they can be sacked easily if the work starts to dry up. That’s certainly what the Federation Of Master Builders thinks is happening.

Rising Costs

Another problem that building firms are being hit with is ever-increasing costs. Since 2016, when the referendum on Britain’s place in the European Union took place, costs of raw materials have gone up markedly. There’s been a 20% increase on the cost of tiles, for example, and a 15% rise on timber. That is having an effect on smaller companies, with many of them lacking the finances and facilities to stockpile goods as businesses in other companies have been doing.

It’s certainly more of a concern for members of the Home Builders Federation than consumer confidence, given that just 7% of them cited that as a worry in a survey conducted in March. 48% of members had suggested that consumer confidence was an issue when the survey was carried out at the end of 2018, so that’s a pretty big shift. It isn’t a shortage of material that has been causing the problems, which is evident by the fact that a shortage of bricks last year was dealt with relatively quickly, but just the cost of material when it is available.

Not Enough Money From The Government

Despite their own admission since 2017 that houses aren’t being built quickly enough, the government simply isn’t offering enough money to the industry. They promised an injection of £2 billion, but aides in Downing Street soon admitted that that would only be enough for around 5,000 new houses when at least 60,000 more have been needed for years.

The lack of money is leaving people in dire situations. It’s believed that as many as 120,000 children are having to sleep under temporary roofs which are simply inadequate. That is what’s causing issues on the social housing front, but the inability to build enough houses has been a problem for decades. Search Acumen believes that the country will be as many as one million homes short of targets by 2020.

We Haven’t Recovered From The Economic Downturn

One of the biggest issues is that country had barely got back on its feet after the economic downturn of 2008 when Brexit came along and introduced even more economic uncertainty to the situation. The money to buy new homes pretty much disappeared in 2008, so fewer homes were built as no one could buy them. The industry started to shrink in the years that followed, including training for new builders and the manufacturing of materials.

As the need for more houses increased in recent times, there were no longer the people with the skills to build them, nor the materials to build them with. That was starting to change just prior to 2016’s referendum, but in the wake of it the building industry was once again plunged into uncertainty, which was then worsened by the fact that European workers, who had the skills, began to leave the country.

There Isn’t Much Land

It’s an obvious thing to say, but builders need land to actually build on. There can be as much demand for housing as you could possibly want, to say nothing of building materials, money to buy it and people willing to work on the sites. Yet if land is in short supply then you’re going too struggle to be able to build anything at all. The lack of space on which to build means that the areas that are available become more expensive, once again leading to an increase in costs.

The Chief Operating Officer of Keepmoat Homes, Peter Hindley, believes that the biggest issue comes down to developers being unwilling to build on so-called brownfield sites. Brownfield sites are tricky to build on, so developers want to steer clear of them when they can. It therefore becomes a matter of weighing things up for developers, given that they’re more likely to face opposition to build on greenbelt land, but if they’re able to then it would be a much easier build.

Conclusion

Whilst there’s no one reason why more houses aren’t being built, most of the answers have the same genesis: the economy. From failing to recover properly from the economic downturn in 2008 through to the current uncertainty surrounding Brexit, companies just don’t feel financially secure enough to plough large amounts of money into building houses and the government isn’t doing enough to help.



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