Political turbulence may be disrupting the housing market in the short term, but over the next five to 10 years we anticipate that mounting public pressure for affordable homes will shape housebuilding policies.

Whatever ideological solutions underpin those future plans, if supply does not continue to rise above the current level of 222,000 homes per year it’s likely there will need to be further government intervention in the planning system to force greater diversity.

For developers this would accelerate the trend towards a shift in end customer from individuals buying on the open market to institutional investors and registered providers bulk buying homes to let. This in turn would have an impact on the design and specification of new build as investors seek durability and consistency in order to control management costs.

In addition, there would be a reduction in gross development value as higher levels of either rental or affordable homes will generate less than open market sales, feeding through into either squeezed developer margins or lower residual land values.

However, this could be offset by shorter building programmes as build out would not limited by sales rates. Less time on site and earlier cash receipts could also result in access to cheaper finance for developers.

Linked to the debate on increasing delivery is the cross-party question of how best to ensure the public purse is able to claim a share of the uplift in land value brought about by development – so-called land value capture. It’s likely that the issue of how this is secured and shared will continue to be a contentious topic with considerable repercussions for the development industry.

Further information

Read more: Spotlight Disruption in development

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