(Bloomberg) -- The UK’s new Labour government entered office off the back of the worst 12 months for housing starts in England in almost 15 years, underscoring the scale of the challenge it faces to spur a construction boom.
The number of new homes starting construction in the year through June collapsed to fewer than 88,000 from more than 190,000 a year earlier, Office for National Statistics data showed Friday. It was the lowest 12-month total since the end of 2009, during the housing market crash caused by the financial crisis.
The UK-wide total has almost halved in a year to just over 114,000. That figure is lower than the English data alone during the pandemic — when there is a gap in national figures — and is therefore also the lowest since 2009.
The figures suggests Prime Minister Keir Starmer faces a difficult start to his ambition to build 1.5 million homes over the current parliamentary term, equivalent to 300,000 a year. He won a landslide victory in the election on July 4, promising to ease the housing crisis for younger voters and rip up planning rules that hold back development.
However, the premier still has to contend with market forces, with private developers slashing housing starts in a slow market after a surge in borrowing costs for them and for home-buyers. The number of housing starts by private developers more than halved over the 12 months to 65,550, well below normal levels.
Anthony Codling, head of European housing and building materials research at RBC Capital Markets, said the legacy of Covid and the previous Tory government scrapping housebuilding targets have also had an impact on developers.
“During lockdown, they all stopped buying land, because who knew what was going on,” he said, calling the land market a “slow-moving conveyor belt.”
“We’ve had householders not buying land, and the planning system grinding to a halt because of lack of targets and so the situation now is that householders are operating off fewer sites,” he said.
(Updates with UK-wide data in third paragraph.)
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