Housing Crisis Deepens

Today’s official figures show a worrying trend for the housing sector. The total number of new homes completed fell for the fifth year in a row which means that the past year was the worst since 1947. Only 14,877 new homes were built across public and private sectors in 2012, a drop of over 42% on 2007.

Philip Hogg Homes for Scotland
Philip Hogg
Homes for Scotland
Philip Hogg, Chief Executive of trade body Homes for Scotland, pointed out that around “465,000 new homes are needed in Scotland by 2035 to meet demand. However, the build rates highlighted today,” he said, “point to a potential shortfall in the region of 140,000 by this time when there are currently already significantly more people than that on housing waiting lists. Clearly this would only exacerbate Scotland’s housing crisis and highlights the need for further intervention by the Scottish Government to help reverse this downward trend.”

House building now at its Lowest since 1947
House building now at its
Lowest since 1947
The drop in completed new homes was most marked in the private sector. These have fallen by 55% between 2007 and 2012. The news prompted Michael Levack, Scottish Building Federation Executive Director, to describe the trend as concerning. “The fall in rates of private sector house-building does at least seem to be slowing down. But such a steep fall in public sector house-building activity at the beginning of this year must be a cause of concern. As we gear up for the Chancellor’s 2013 spending review later this month, I hope these numbers will add further weight to the calls being made for a reversal in cuts to capital spending.”

Graeme Brown Shelter Scotland
Graeme Brown
Shelter Scotland
However, Graeme Brown, Director of Shelter Scotland, acknowledged that the figures showed that “the Scottish Government appears to have delivered on its target to complete 4,000 new social homes during 2012-13, and we welcome that progress. However, a sharp drop in the number of new social homes approved for construction and a drop in the number of units where construction has actually started, will complicate efforts to deliver the pledge in each of the remaining years of the parliament.”

Michael Levack agreed, arguing that, with demand for affordable housing at a record high, “building more homes ought to be a major political priority. Bolstering capital investment in housing would provide the pipeline of work construction companies need to rebuild capacity and jobs and to offer more high quality apprenticeship opportunities within the industry. At the end of the day, house-building should be seen as a major catalyst of economic growth – and government funding priorities need to reflect that.”

Michael Levack Scottish Builders Federation
Michael Levack
Scottish Builders Federation

Philip Hogg from Homes for Scotland pointed out that while the MI New Home mortgage indemnity scheme “is making a positive impact in helping people step onto and up the property ladder as well as relieving pressure elsewhere in the system, today’s figures are a stark reminder that, and as the Housing Minister herself notes, operating conditions remain very challenging for house builders. They also illustrate the need for the Scottish Government to bring its equivalent Help to Buy shared equity scheme to market as soon as possible and to refrain from proposals to increase regulation and cost which we believe will only further depress housing supply.”

Looking forward, Graeme Brown of Shelter Scotland drew the worrying conclusion that there were few signs of optimism, adding “To deliver the Scottish Government’s pledge to build 4,000 homes for social rent in every year of this parliament an ongoing pipeline of shovel ready sites for social house building is required. Today’s figures show that approvals have fallen by 38 per cent from last year. The 18 per cent drop in the number of approved sites where construction has started raises further worries that the Scottish Government is not building quickly enough to maintain the capacity and skills in the workforce that rely on social house building for employment.”