Gleeson Homes: The affordable housing challenge in 2022

Gleeson Homes offers its housing market predictions for 2022

With a myriad of pressures on household finances, as we move into 2022, there will be an increasing demand for affordable housing to serve first-time buyers, lower income households and key workers looking to get onto the property ladder. However, with build costs also coming under the same inflationary pressures, Gleeson Homes believes it will be increasingly challenging to cater to these sections of society. Nevertheless, the housebuilder also believes there are opportunities for innovation and collaboration that could help the industry thrive.

Affordability of Housing

The battle to keep housing affordable for all will continue to be challenging in the early stages of 2022. Currently the UK is experiencing 30-year high inflation, energy price hikes and rising housing prices. Furthermore, interest rates are expected to rise at some point in 2022 which will ultimately increase the cost of mortgages. Therefore, consumers are increasingly likely to have less disposable income to save and ultimately put towards buying a house.

First-time buyers and low-income households will see their wallets hit hardest by these economic changes and consequently Gleeson argues it will be critical to advance affordable housing delivery in 2022 to serve these consumers.

James Thomson, Chief Executive at Gleeson Homes, said: “The macro-economic climate has proved challenging in recent years with Brexit and the pandemic causing ongoing uncertainty. Rises in house and energy prices, not to mention inflationary pressures, mean that having a strong supply of affordable housing will be critical in allowing lower income households and key workers access to the property market.

“Owning property has a range of benefits, including allowing people to save more by avoiding paying rents, while investing in their future through owning a house. It is Gleeson’s mission to provide affordable housing in the North and the Midlands to encourage a greater deal of financial independence for these consumers.”

Continuing effects of the pandemic

With the rise of the Omicron variant, the UK has been served a stark reminder that the pandemic is not over. Gleeson expects that people are likely to continue to revise their lifestyle priorities due to the ongoing effects of the pandemic, and in turn this will affect how and where people want to live.

For example, the pandemic has accelerated the onset of flexible working, meaning people have less need to be based in city centres or drawn to the South East. People are also looking to move nearer family and friends having been separated for much of the pandemic. Gleeson believes this will encourage more people to live in areas like the North of England and the Midlands, especially when considering the investment in infrastructure which is expected to be announced in the Government’s Levelling Up White Paper early next year.

James Thomson added: “Over the last two years the pandemic has shaped our living habits and changed our priorities and, as we have seen with the Omicron variant, it will continue to do so in 2022.

“While the National Model Design Code has a laudable aim of streamlining the planning process and providing useful guidance to local authorities, we urge the Government not to adopt a narrow definition of what we mean by ‘beauty’. Ultimately, we need to build homes people want to live in and help them thrive, taking into account these changed priorities brought about by the pandemic. Our customers have a strong preference for detached and semi-detached homes, whereas the Code currently appears to favour terraces and townhouses. We encourage the Government to offer greater flexibility for housebuilders to provide the type of homes that people want.

“Critically, we have also seen customers wanting more space, both outside and inside to gain a better quality of living. Therefore, at Gleeson we continue provide front drives and gardens as standard to maximise space to meet this need, while still keeping prices affordable for key worker and low-income buyers.”

Upskilling is needed

In order to deliver upon the Government’s levelling up agenda, as well as delivering affordable homes to the North and Midlands, Gleeson believes increased investment is needed to create skills and jobs for the next generation of builders.  Gleeson is therefore calling for the Government to introduce and fund more nationally recognised initiatives, similar to the already successful ‘National Apprenticeship Week’, to encourage young people into the construction sector and achieve the ‘Levelling Up’ agenda.

James Thomson highlights: “At Gleeson, we run a successful apprenticeship scheme and hope to see more initiatives like this in 2022 with the aim of boosting capacity in the housebuilding sector to meet national housing needs. In order to ‘Level Up’ the North, we implore the Government to invest in training and apprenticeship schemes to grow the talent pool regionally thereby ensuring there are the vocational skills needed to meet the growing demand for talent in this sector.”

Adapting to the decarbonisation challenge

With the release of the Government’s Heat and Buildings Strategy earlier this year and Part L regulations being phased in, Gleeson expects there to be an increased focus on decarbonising the housebuilding sector in 2022. However, the increasing emphasis on this will throw into focus the cost of construction and the ability to deliver affordable housing..

James Thomson comments on the decarbonising housebuilding: “At Gleeson we are already making significant strides by trialling new technologies such as air source heat pumps at scale, for example. Through existing energy saving measures, our homes only cost on average £65 a week to run.

“However, we need to work closely with Government, the housebuilding sector and consumers as we progress decarbonisation. Importantly for the affordable sector, this needs to be achieved without risking a rise in construction prices with the resulting end product being more expensive for the customer.

“Greener technology is undeniably more expensive at the current time and heat pumps will not be the same price as boilers in the short to medium-term, so we call on the Government to consider providing greater support to builders focused on affordable housing, including greater flexibility in applying green regulations, so schemes don’t become unviable.”