It has been reported that three quarters of property development finance brokers predict the industry to fall short of its housebuilding target.
Further to this, new research has shown ‘less than 1 in 10 (8%) brokers working in property and asset finance expect the government to meet its 1 million new homes target by 2020.’
So why is there such doubt amongst industry experts surrounding the government’s ability to achieve its housebuilding target?
According to the research, one barrier to developers is the ‘ability to source good land and redevelopment opportunities (40%) and problems/delays with the planning process (38%).
So what are the problems?
This research suggests property development finance brokers believe property developers are inhibited from the outset when securing new business. Noel Meredith, executive director of United Trusted Bank, supports the argument that there is simply a dearth of fundamental resources for developers to even begin an increased level of builds. Meredith points to how a ‘short supply of suitable green and brownfield sites’ has seriously hampered the process; in many cases, the common obstacle to projects has been finding somewhere to actually build new homes, and then secure permission from planners to begin the development.
Although there is plenty of land which is suitable to be built upon, development opportunities are increasingly delayed or denied by the pressures imposed on projects from multiple stakeholders. This includes conservationists who are acutely aware of any detrimental impact the new builds could have on the environment, to local residents who are reluctant for their neighbourhood to undergo a changing landscape.
The government has committed to making development land more readily available, however this has yet to be seen in practice. Until this commitment becomes reality, and the 2020 homes target remains unmet, house price inflation will only increase. The lack of supply will see approved development projects getting increasingly inflated prices, and resultantly lead to higher asking prices for the finished products, or reduce profit margin for the property developers themselves.