House affordability hits worst ever level, as reduced housebuilding growth forecast

House affordability reaches lowest level since records began

The Office for National Statistics (ONS) revealed this week that house buying affordability in England is the worst at any point since records began in 1999.

Latest affordability data from the ONS shows that the median house price in England in the year to 31 March was £275,000; equivalent to 8.7 times the median income of £31,000.

This is an increase on the 8 times income reported in 2020/21, greater than the previous peak of 8.2 times income in 2008 during the financial crisis, and almost double the 1999 rate of 4.4 times income.

The gap between England and the rest of Britain also widened, with Wales’ affordability ratio reaching 6, and Scotland remaining steady at 5.49.

Meanwhile, Liz Truss has vowed to remove planning constraints and other regulations to boost housebuilding in new ‘investment zones’.

Truss, who is now bookies’ favourite to beat rival Rishi Sunak to become Conservative leader, said the move would create “new hubs for innovation and enterprise” in the spirit of Victorian model villages such as Bournville in Birmingham, and Saltaire in Yorkshire.

This follows Truss’ vow last week to abolish the Government’s target of 300,000 new homes a year by 2025.


Construction growth expected to slow, as energy prices set to cause winter disruption

The Construction Products Association (CPA) have forecast construction output to rise just 2.5% in 2022, before falling to 1.6% in 2023, despite growth in infrastructure and industrial sectors.

Projecting a slowdown in private housebuilding, the CPA Summer Forecast 2022 forecasts annual house price inflation to slow to 6.0% this year and 2.5% in 2023, amidst concerns as to how long the industry can remain buoyant in the face of economic headwinds.

Near-term concerns for major house builders focus on mortgage availability after the end of Help to Buy in March 2023. Other key issues for houses include planning and rising costs of materials, labour and meeting the new Building Regulations.

Private housing output is forecast to rise by 1.0% in 2022 and remain flat in 2023.

CPA SUMMER FORECAST 2022

The Construction Leadership Council (CLC) have warned that industry should also prepare for further supply disruption, citing volatile energy prices as the leading factor.

In its latest Construction Product Availability Statement, the CLC also reported that high levels of inflation exacerbated by the war in Ukraine seem to have stabilised, although warned that it is unlikely prices will fall in the coming months.

Demand remains high for gas boilers and renewable energy products; however, supplies of aircrete blocks and bricks have improved due to a fall in demand.

Meanwhile, both Forterra and Ibstock have revealed an increase in profits, boosted by price rises.

Masonry giant Forterra reported pre-tax profits rising to £44.2m for the six months to 30 June 2022, up from £29.1m this time last year. Forterra also confirmed a 30% rise in the cost of materials since the start of the year.

Ibstock also reported a 32% rise in pre-tax profit over the same period, reaching £51m (2021: £39m).

The brick manufacturer said it had seen “significant variable cost inflation”, particularly in energy, materials and freight, but has been able to fully recover the additional cost through price rises for its products.


Government announces improved accessibility criteria

The Department for Levelling Up, Housing and Communities (DLUHC) have announced a change to Building Regulations to strengthen rules around the accessibility features new homes must have.

Following a consultation, the DLUHC have said it will mandate the existing optional M4 Category 2 requirement for all new dwellings, including step-free access to all entrance level rooms.

Older and disabled people must have homes which are suitable for their needs, and allow them to live comfortably and independently.

This consultation has made clear raising the accessibility standard of new homes is supported not just by people who use accessible homes, but by industry and wider stakeholders as well.

With that mandate, we are forging ahead with the next steps to make this a reality.

EDDIE HUGHES, MINISTER FOR ROUGH SLEEPING AND HOUSING

Meanwhile, a proposed scheme to ease the impact of nutrient neutrality rules will not be available in the autumn as previously announced, Natural England have revealed.

Revealing the news a few days after announcing the scheme, the Government’s environment advisory body said that tendering will begin later this year.


NHBC publishes Future Homes Standard guidance

The National House Building Council (NHBC) has published a new report on how to realise the “full potential” of the Future Homes Standard, whilst addressing its challenges.

Future Homes – Avoiding Unintended Consequences provides advice and guidance to developers on overcoming hurdles arising from energy saving measures in new homes, and aims to fill the gaps in knowledge, skills and practices required to delivery homes “reliably and at volume”.

The Future Homes Standard will be in place by 2025, mandating the transition to low-carbon heating and future-proofing homes to become zero carbon.

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