The Government has been talking about speeding up the planning process and introducing revolutionary change to help ease the housing crisis for a number of years. However so far this has been difficult to achieve. We will now have to wait for the Planning Bill to be published later in the year to see whether the Government has the stomach for any fundamental changes to the system. This uncertainty is having the effect of continued delay in the production of local plans and planning permissions granted. Whilst the Government has continued to consult on changes to the system over the last five years, rather than actually making any significant changes, there has been a continued reduction in housing units granted planning permission. In 2021 the number of housing units granted planning permission dropped below 300,000 for the first time since 2016 (see graph below).
The introduction of the National Model Design Code and the potential for further changes to the system in the forthcoming Planning Bill will only add to further delay in the grant of deliverable planning permissions in the next few years. The ability of the industry to increase the number of active sales outlets and deliver anywhere near the national target of 300,000 homes every year is being severely hampered by the planning system. This is likely to remain so until fundamental changes are made to the system and those in genuine housing need are given a real voice in the decision making process. Digitalisation of the system, one of the Government’s key proposals, may just offer some hope of improving engagement in the system.
Mortgage approvals remain one of the key indicators of activity in the housing market.
Approvals in the calendar year 2020 showed a slight increase on the previous year.
Seasonally adjusted figures for January 2021 to June 2021 average a healthy 86,000 per month.
Housing Supply and Help to Buy
NHBC new starts reduced significantly in 2020 as a result of the pandemic but are recovering in 2021 to more normal levels. Help to Buy transactions also reduced significantly in 2020 until the final quarter when they exceeded pre-pandemic levels.
Housing transactions overall, apart from Q2 2020, were fairly resilient in the face of the pandemic.
House prices have increased each quarter and that trend is continuing in 2021.