The North-East Tops the Table for New Builds
With new build defined as the number of private housing starts in the last 12 months, the North East leads the way with 14% of total housing transactions over the last 12 months followed by London (13.9%) and East Midlands (12.1%).
Around 11% of all property transactions nationally each year are new build, though Hometrack’s study illustrates that the distribution of development is not consistent across the UK; evidently, some local housing markets are more new build driven than others due to the introduction of Help to Buy, growth in LCHO, and the emergence of build-to-rent
The North East is also providing good return on investment for housebuilders. The region has outperformed its long run average which could explain the increased supply of new builds over the last year. As the market is less mature in its recovery following the financial crisis than elsewhere in the country, the region has registered a 2.4% increase on the 5-year CAGR of 1.9% and there is still headroom for growth as prices rise off a low base.
Alex Rose, Director at Hometrack, stated, “The above average level of new build concentration in the North East could indicate that developers are sensing demand for new housing in areas where the economy and in particular housing transactions are slow and in need of resurgence. Help to Buy is being used on a notable proportion of these housing completions in the region as a means of supporting new build volumes.
“In London and the South East, however, house price performance has been strong over the past five years but there has been low single digit growth with small declines in prime London in recent months. In London there has been an increase in the supply of housing within the last 5 years as turnover has grown and developers look to accelerate their ambitions to help meet the government’s target of 300,000 homes per year.
“With competition amongst providers ever increasing, many housebuilders are beginning to migrate out of the capital and look elsewhere to more profitable locations with less constraints on affordability. When comparing the different regional rates of new build to the UK average of 11% it is noticeable that much of the new private housing delivery is occurring in the East of the country, with only the West Midlands as an exception.”