Labour is forging ahead with plans to increase the number of homes across the country, and its targets could mean a big boost for total UK housing value.
Since the new Labour government took charge at 10 Downing Street, it has put the UK housing market firmly in its crosshairs for change. This has included a reinstatement of housebuilding targets to 370,000 a year, and reforms to the National Planning Policy Framework, among other proposals.
Compared with the previous government’s targets, this equates to an annual boost in new homes of 22%, according to research from Benham and Reeves, which has also broken down the actual increase in value this could bring to the country’s housing stock.
Analysing annual house price growth figures of the average new-build of 3.5% per year, Benham and Reeves estimates that a further £161.6bn worth of property could hit the housing market over the next five years – if Labour manages to deliver on its promise.
All UK housing is not equal
Although it may have relabelled the term, the Labour government seems keen to level up, or create more balance, across the country, removing the heavy focus and dominance of London in favour of spreading assets and growth more fairly across the rest of the UK.
This means that each area is to have its own housebuilding targets based on current housing stock and demand for homes in that location. For example, London is actually expected to see a decline in housing delivery – although not in all parts of the capital – while the north east could see the biggest rise.
The vast differences in property prices across the UK housing market has also played a part in Benham and Reeves’ calculations of course, with the capital and the south east having significantly higher prices than some areas of the north that are in the greatest need of new housing.
One anomaly is Kensington and Chelsea, where the number of new homes set to be delivered each year for the next five years is expected to rise by 209% compared with previous targets. Over this period, this is estimated to bring an additional £5.1bn to the housing stock in this area.
Places with the highest targets
Certain pockets of the UK housing market are in the greatest need of a property stock boost.
The local authority that will see the biggest jump in housebuilding targets is Redcar and Cleveland in the north east, where new home numbers will climb to 642 per year. This is a 1,388% rise compared with the previous government’s method, which would have seen just 45 new homes delivered per year.
Other areas that are set to see the biggest shift in housing targets are Burnley with a 625% increase from current levels; Westmorland and Furness (531%); and Hyndburn (528%).
New UK housing targets must be honoured
Director of Benham and Reeves, Marc von Grundherr, said: “Our new Labour Government has been ambitious from the get go when it comes to the proposed shake up of UK housing delivery targets and not only could we see a very notable boost to the number of new homes reaching the market, but over the next five years these new homes would also bring a sizable boost to the overall value of the property market.
“Of course, some areas are set to benefit to a far greater extent than others and it’s interesting to see that, under new proposals, London is the only region expected to see a decline in housing delivery. This is despite the fact that it’s probably one of the worst hit areas with respect to a shortage of housing to meet demand.
“It’s also important to note that housing delivery has sat well below any Government target set for quite some time now and so whilst the new targets set out by Labour are admirable, it means very little if they aren’t honoured.”
