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Supply of new homes falls, as building costs rise

Christina Hoghton
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Christina Hoghton

Rising prices, supply chain issues and the pandemic have delayed construction, leading to a fall in new homes onto the market

The number of homes where building work has started (known as new starts) fell 3% to 41,600 in the last quarter of 2021, compared to the same period a year earlier, according to the Department for Levelling up, Housing and Communities.

The number of homes completed was 41,330 in October to December 2021, an 11% decrease when compared to the same quarter a year ago.

Scott Taylor-Barr, financial adviser at Carl Summers Financial Services, said of the drop in housing supply: “With the cost of building materials having increased so sharply over the past couple of years (assuming that you can even get hold of the materials you need), it’s no real surprise that many house builders have mothballed sites and slowed down the amount of work being done.

“Their profit projections will have all been worked out with lower material costs involved, and they are now faced with a shortage of skilled construction workers who are willing to graft at the rates of pay planned for the original development.”

Graham Cox, founder of Self Employed Mortgage Hub, added: “Against the backdrop of Omicron and rising living costs, it’s not hugely surprising to see a fall in the number of homes being built in the final quarter of last year. It’s a shame, of course, because we desperately need to address the UK’s chronic lack of affordable housing.

“We’ve been promised a huge ramp-up in housebuilding for years, but nothing seems to change. The bottom line is, property in this country remains massively overpriced.”