Completions recovering well

Completions have been recovering well after their lows in April 2020 due to the first lockdown, according to weekly Energy Performance Certificates (EPC) data. Since the 17th August, completions in England have been back at their 2019 levels.

In the North West and South East completions have recovered the most at 9% and 10% above 2019 levels in recent months. However, completions in the East of England, North East and Yorkshire and the Humber remain 4-12% below their 2019 level. 

Despite the recovery, the number of homes delivered in 2020 in England fell to 215,000, -16% below the previous year, according to weekly EPC data. 

Meanwhile, new Net Additional Dwellings data shows that the annual delivery  to March 2020 was 244,000, very similar to the previous year and around -4% lower than EPCs had previously indicated. 

Starts lagging a little

The number of homes started has nearly recovered to 2019 levels. Private starts were running at 98% of their 2019 levels in December, compared to 94% for private completions according to NHBC data. However, this still leaves the absolute number of starts below completions, which needs to reverse if the pipeline of homes under construction is to grow.

The number of sites started during October 2020 was 5% greater than in October 2019, for both the Social and Private sectors, marking the peak of the recovery. However, both sectors started fewer sites during December 2020 than in December 2019, according to Savills using Glenigan. This suggests housebuilders were slightly  cautious at the end of the year.

Consents improving

The number of homes granted full planning consent on sites over 20 units has recovered to 12% above their 2019 level in Q3 2020 after falling -27% below in Q2. However, full consents dipped again in Q4 to -3% below their 2019 level. 

The planning process has therefore been more resilient than building activity and this bodes well for land supply in the next year, providing a pipeline of sites to enable continued delivery of homes. As ever this relies on the right sites with the right mix being consented in the right locations.

Reduced Help to Buy sales in-line with wider market

Help to Buy (HTB) completions fell during the second quarter of 2020, in-line with sales in the wider market. Completions Help to Buy (HTB) completions fell during the second quarter of 2020, in-line with sales in the wider market. Completions supported by the scheme were -61% lower in April to June 2020 compared to the same period in 2019 according to MHCLG. All home sales completions were -56% lower than 2019 levels in the same period.

The previous HTB scheme closed to new reservations in December, with completions continuing until May following a two month extension.  Help to Buy continues but is now restricted to first time buyers and with regional value caps on homes bought through the scheme. We have previously estimated this could reduce sales under the scheme by up to 34%, but this could be less if the type of homes eligible are adjusted to meet the caps.  

Build to Rent shows resilience

The Build to Rent sector has been comparatively resilient during this disrupted period. Completions in the year to December were down only -7% on the year before at 11,500. However, this decline followed a steep rise in completions through 2019 and the overall level of output is still high compared to historical levels. This resilience has been supported by a large pipeline of schemes and the number of new sites starting in the year to December 2020  was up 15% on the year before. This is a positive change in direction after a decline in starts during 2019.

ANNUAL NEW HOMES DELIVERY FELL IN 2020

New homes delivery fell to 215,000 in England in 2020, a fall of almost – 16% on the previous year’s delivery, according to weekly Energy Performance Certificates data. 

The number of full planning consents on sites over 20 homes in the year to Q4 2020, was down only -5% compared to the year before, according to our analysis of Glenigan data.

Completions had recovered to 2% above their 2019 level during  September 2020, according to NHBC data for the UK. Since then completions have held broadly steady, sitting at -6% below the 2019 level during December.

Starts reached 14% above their 2019 level during November and dipped to -2% below in December.

However, this recovery has left the absolute number of starts below completions since September, meaning that the pipeline of homes under construction is getting smaller.

Full planning consents for sites with over 20 units reached nearly 61,365 in Q4 2020. This was -3% below their level in the same quarter of 2019. 

This is a slight decline on Q3 2020, which had rebounded to 12% above the 2019 level in Q3 from a low of -27% in Q2.

The number of private sites starting recovered to 5% above its 2019 level in October 2020, however, fell -39% during December, according to Glenigan data for the UK.

Social Housing site starts reached their 2019 level in August and rose to 52% above their 2019 level during September. However Social Housing starts also fell in December to -25% below their 2019 level.

Help to Buy transactions fell -18% in the year to Q2 2020 with 42,200 loans issued. This was driven by a fall of -61% in April to June 2020 compared to the same period in 2019.  This fall in sales was in line with the impact of the lockdown on wider housing market activity.

London continues to take a significant market share of Help to Buy loans, rising to 13% of the total in Q3 2020.

Build to Rent (BtR) completions in the 12 months to December 2020 were down -7% on the year before at 11,500 homes. The first lockdown slowed down completions of BtR homes which peaked in 12 months to May 2020.

Starts were less affected, and were up 15% in the year to December having rebounded from a low at the end of 2019 and remained relatively stable on an annualised basis over 2020 before falling back at the end of the year.