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Hometrack Analysis Reveals London and The North East of England As UK’s New Build Hotspots

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  • Two regions have seen the largest concentration of new build starts in past 12 months
  • Currently new build housing starts account for 11% of all property sales across the UK.

The following analysis conducted by Hometrack identifies the housing markets which are most dependent upon new housing sales, so-called new build concentration.

Background

  • Each year around 10% of all property sales are new build, a trend that has held firm for the last 20 years.
  • Currently this figure is running at around 11% across Great Britain with house builders under pressure to increase supply by the Government.
  • However, as you would expect the supply of new homes across the country is not uniform and dependent upon the strength of local housing market conditions, land availability and planning restrictions and requirements.
  • This analysis highlights the markets that are more new build reliant than others.
  • There is a mix of market typologies. Ranging from those areas seeing major regeneration and new transport infrastructure to locations with good land availability.

Analysis – UK and regional context

  • Data from the DCLG shows new private housing starts are up by 3.1% in the last year and by 33% over the last 3 years as builders increase output on the back of rising transactions and improved housing demand. Further specific support for new home buyers has come from Help to Buy which has been used for 27% of all housing completions in the last year.
  • The regional markets with the highest concentration of new build starts as a proportion of housing sales are the North East (15%) and London (14.3%) – see figure 1.
  • The above average level in the North East reflects a slow recovery in the general level of housing transactions in the North East with builders using Help-to-Buy to support new build starts hence the 15% concentration.
  • London has seen a major increase in housing supply in the last 5 years and while wider the general level of housing turnover has grown so has new supply across the capital meaning private housing starts in the last year equate to 14% of all sales. The highest concentrations are in inner London where regeneration schemes have been a key source of new housing supply.

Analysis – local market context

  • New housing delivery is not uniform across the country and land availability, housing demand and planning requirements influence where homes are being developed, something which changes over the housing cycle and in response to policy changes.
  • Hometrack’s analysis shows there are 58 local authorities having a concentration ratio of over 20%. These 58 (15%) markets account for a third of all private homes started in the last year.
  • The London borough of Newham has the highest concentration where there are more new homes started in the last year than sold in the entire borough in the previous year. This constitutes a new build concentration of 104% and far outstrips the next two on the list in London namely Lambeth (38%) and Southwark (36%). All these areas have major regeneration schemes with homes targeted at buyers across London and overseas.
  • Outside London, Cambridge (42%), Ribble Valley (42%) and Midlothian (39%) are the areas with the next highest concentrations. Cambridge and Midlothian adjacent to Edinburgh have seen significant new housing delivery.
  • Most markets with a high concentration of new build are those where land has been released for new development. Examples include Newport, South Northamptonshire and Blaby in Leicestershire. The list also includes other areas with significant new housing delivery such as Corby (28%) and Milton Keynes (23%).

Alex Rose, Managing Director of Data and Analytics at Hometrack says: “These figures show how the delivery of new housing is not evenly distributed across the country as developers balance the relative strength of local housing markets and demand for new housing against land availability and planning constraints.  The challenge for house builders is that some local markets are more new build reliant than others which will impact assumptions on sales rates and assessment of demand for housing. This is particularly important given the proposed transition from Help to Buy to Starter Homes in 2016 where there is overlap between the two schemes.

There are many parts of the country where new private housing starts as a proportion of sales are well below the national average. 102 local authorities have a new build concentration of less than 5%. This is down to tougher planning requirements, land availability and the strength of the local housing market resulting in below average levels of new housing starts.

“What’s crucial is that those developing homes and buying land understand the competitive landscape and the impact it has on prices and sales rates, something that is equally important for planners assessing the viability of new housing schemes. Some markets have seen more of a surge in new supply than others in recent years and a granular view on supply is key to de-risking development and making accurate and informed investment decisions.”

New build concentration by region (%)

 Hometrack analysis reveals London and the North East of England as UK’s new build hotspots

New build concentration – top 5 London boroughs and top 10 rest of Great Britain

 

Hometrack analysis reveals London and the North East of England as UK’s new build hotspots

 

Hometrack analysis reveals London and the North East of England as UK’s new build hotspots

 

 

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