The Labour manifesto commits the Government to building 1.5
million new homes over the next 5 years. Action to achieve
this commitment has, so far, focused on releasing the land on which
these homes can be built. But what about the demand for these
homes? Are there enough buyers to "absorb" the increased
supply, particularly in the later years when, presumably, supply
may need to reach close to 400,000 homes a year?
Savills has published research
carried out for the National Housing Federation concluding:
"Our analysis and the history of housing delivery since 1945
shows that a clear shift in the tenure mix and pricing of new homes
will be needed if this is to be achieved. Business as usual would
leave a demand gap of 40,000 to 95,000 homes per year."
In other words, there are simply not enough homebuyers with
sufficient funds to purchase the additional supply.
The report continues:
"A large increase in grant funding for affordable housing could
quickly boost demand for new homes from Housing Associations and
other Registered Providers. These new low-cost rented homes could
quickly be absorbed into local markets, providing homes for people
on social housing waiting lists and homeless households."