House prices hit peak – so where will new supply originate?

According to the latest market report from Hamptons, the housing market is showing no real sign of slowing down. In 2022, the agency expects demand to keep price growth above pre-pandemic levels. It is forecasting a 3.5% increase next year, slowing to 3.0% in 2023. What this means is that by 2024, the average price of a house or flat could be a whopping 13.5% higher than today.

So it’s good to hear that the government hasn’t forgotten its pledge to build more housing. The government has said it will build 300,000 new homes a year and despite the 2020 lockdowns, 244,000 new homes were delivered last year according to the DLUHC.

It seems unlikely, given the supply chain problems now being faced by housebuilders, that pre-pandemic targets will be met this year. However, the announcement this week that £58 million from the £75 million Brownfield Land Release Fund (BLRF) has been allocated to 53 councils to be used for housing is a step in the right direction.

The funding is intended to boost local areas by giving councils the ability – and the cash – to transform disused sites, protecting green spaces in urban areas as well as the countryside by encouraging redevelopment of brownfield land.

The government estimates that the latest money from the BLRF will help release enough land to build around 5,600 new homes. This sounds like a drop in the ocean but when it is added to the £400 million Brownfield Fund being made available to the seven mayoral combined authorities it could unlock more than 30,000 homes. This is still not enough. And certainly not enough to bring house prices down to affordable levels. But at least it’s a start.