London has seen its first year of growth since 2014, with the number of new homes registered to be built surging 38% in the fourth quarter of the year, according to the latest NHBC stats.
“The year hadn’t been going particularly well until the fourth quarter,” said Neil Jefferson, Chief Operating Office of the NHBC. “Builders might be moving to areas where people can access Help to Buy. It will be interesting to see how this pans out in 2018.”
London’s impressive fourth quarter meant that the rate of new homes being registered was slightly up on 2016, with 17,850 units compared to 17,587 the previous year – the first increase year-on-year in the capital since 2014.
The surge of new property registrations in London was a pleasant surprise for analysts, and an extraordinary comeback after a difficult first three quarters. Housebuilders registered to build just 2,494 homes in London in the third quarter of 2017 – the lowest level since the nineties property crash.
Gwyn Roberts, Homes and Communities Team Leader at BRE, said, “There could be a variety of reasons for the strong surge in new home registrations in the capital, including Sadiq Khan’s new policies on housing numbers driving an increase in development. Some developers may have been registering a greater number of new homes before the next London Plan takes hold.
“With the conclusion of Brexit drawing closer, developers may also be eager to progress developments before any measures are passed which might deter EU construction workers coming into the UK. Despite the current gap, the uncertainty of Brexit may diminish the number of construction professionals further, lighting the fire behind developers’ collective drive to register and complete more homes.
“It’s positive that more homes are being built but they must be high quality homes that deliver against a range of social, economic and environmental issues.”
According to Steve Wood, Chief Executive of the NHBC, there has been widespread recognition of the fact that the industry needs to make changes – to culture and ownership of risk, especially in the wake of Grenfell Tower. “Too many homes are not built to the quality that is needed,” he said.
Wood said that modular construction will play a bigger role in 2018, and he wouldn’t be surprised to see a wave of new investment coming from overseas. “Builders are considering how to build differently,” he said. “Looking ahead, NHBC will continue to work with the industry to help raise the standards of new homes. With 6% growth in the quantity of new home registrations, the focus on delivering quality for consumers remains critical.”
Although Jefferson warned that large developments can cause statistics for London to be particularly volatile, the surge in registrations bodes well for the year ahead.
“Historically, growth starts in London and spreads throughout the rest of the UK,” he said.
Overall, 160,606 homes were registered throughout the course of 2017, up from the 152,017 the previous year and the highest since the pre-recession levels of a decade ago.
The private sector grew by 3% with 118,825 new homes registered, with the affordable sector increasing by 14% to 41,781 – the highest yearly total for the sector since NHBC electronic records began 30 years ago.
New home completions also increased by 4% from 141,685 in 2016 to 147,278 last year.
Nine out of 12 UK regions experienced an increase in registrations, with the East Midlands (+19% ;14,481), Wales (+19%; 5,470) and North West (+12%; 16,947) among the areas which saw noticeable growth.
Although a long way from the government’s target to build 300,000 new homes a year, the number of new home registrations beat the industry’s long-term average of 154,860. The average is taken from when NHBC records began in 1972.