New home sales to plunge as property crisis deepens
Sales of new homes are expected to plunge by more than 50,000 a year as onerous planning regulations and turmoil in the property market take their toll on development.
New build sales could fall from 145,000 to 90,000 a year, or even more sharply, according to Savills.
At the end of last year, the average rate of house sales dropped to the lowest level since the last financial crisis, a report by the estate agent found.
Developers have been hit hard by falling demand for new build homes and red tape in the planning system. The number of sites gaining planning consent for new homes has plunged by nearly a third over the past five years.
Meanwhile, demand has fallen because of higher mortgage rates and the end of the Help to Buy Scheme.
Help to Buy, which closed to new applications in October, supported first-time buyers seeking to purchase a new home by contributing towards the cost of a deposit.
Under the scheme, they received a 20pc loan - or 40pc in London - that was interest-free for five years, which allowed them to get on to the housing ladder with just a 5pc deposit.
The scheme was introduced in 2013 after the financial crisis to help boost demand for new homes, but experts have accused it of inflating house prices.
Savills said the Government’s target for developers to build 300,000 homes per year is unattainable without intervention. The estate agent called on local planning authorities to give consent to more sites. It also said the loss of Help to Buy means that new homes will need to appeal not just to first-time buyers, but to the widest possible range of homeowners.
Developers had called on the Government to introduce a new version of the scheme in the Budget but the appeals were ignored by the Jeremy Hunt, the Chancellor.
Without a replacement for Help to Buy, Savills expects new build sales to be lower than before the last financial crash, in line with wider housing market activity.
Despite a lack of new homes being built, Rishi Sunak, the Prime Minister, ditched mandatory local housebuilding targets in the face of rebellions from backbench Tory MPs.
He was forced to change course after 60 Conservative MPs threatened to veto his flagship Levelling Up and Regeneration Bill.