Delivery falls below pre-Covid trends

Housing delivery came in at 246,947 new homes in England over the year to Q3 2021, according to Energy Performance Certificate (EPC) data. That’s around 13% below the year to Q3 2019.

Overall, completion of new homes has now fallen back below the pre-pandemic trend, after a bumper twelve months saw the year to Q2 2021 come within 1,000 homes of matching pre-Covid delivery volumes. The North West was the only region to outperform its equivalent figure for 2019. 

Starts and completions stable

Starts and completions were stable in Q2, according to DLUHC. Year to Q2 2021 showed strong improvement, with the low figures for Q2 2020 no longer holding down the rolling total.

The development pipeline for new homes remains smaller than it was pre-Covid. Starts marginally exceeded completions during the first half of the year, but the 12% deficit against completions during 2020 remains. 

With constrained supplies of labour and materials, higher input prices and lower planning consents, it is unlikely that the deficit in starts will soon be remedied. Our most recent completions forecast predicts that housing delivery will only fully recover to pre-pandemic trends in 2025-26.

Consents static compared to last year

Full planning consent was granted for around 275,000 homes in the year to Q3 2021, down 7% on last year, according to our estimate using data from Glenigan. Consents remain 16% below the year to Q2 2019, and about 9% below the Government’s housing delivery target of 300,000 homes by the mid-2020s.

Regional variation in delivery against housing need

Enough planning consents were granted to meet housing need in the north and midlands of England (exceeding need by over 51% in the North East), but remains short in the south and east.

We estimate that planning consents were 9% lower than completions across the South East and South West in the year to September 2021, and 10% lower in the East of England. This means that delivery of new homes is likely to fall even further below need in those regions. In London 32% more planning consents were granted than homes built in the year to Q3 2021, but consents still remained well short of housing need. 

Were the Housing Delivery Test run for the three years to Q3 2021, we would expect 68% of local authorities to pass. That’s lower than the 71% who passed our assessment last quarter, but still higher than would otherwise have been the case without the one-off adjustments to account for Covid (only 59% of councils would have passed without the adjustments). 

With falling delivery and starts yet to make up their 2020 deficit, we expect more local authorities to fail to meet housing delivery requirements in future iterations of the Test. 

246,947 new homes were delivered in the year to Q3 2021, according to Energy Performance Certificate (EPC) data. That’s around 3% lower than the year to Q3 2019. Delivery also came in slightly lower than the year to Q2, down by 2%. 

The year to Q3 2021 saw new planning consents remain steady at an estimated 275,000, the same as the year to Q1 and year to Q2, according to our calculations using Glenigan figures. This is 16% below the numbers seen in the pre-pandemic year to Q3 2019.

Completions grew 18% in the year to Q2 2021, while annual starts rose even faster, growing by 20% across the same period. Both figures received a boost as the annual rolling total moved beyond lockdown-stricken Q2 2020. 

On the other hand, both starts and completions saw very small quarter-to-quarter drops of 1% compared to Q1 2021.

Completions continue to maintain their lead over starts, but the gap between the two is now the smallest in two years due to starts growing more rapidly. 

Delivery of new homes in the year to Q3 2021 was below pre-pandemic trends across England, with only the North West beating the equivalent figure in 2019. 

Housing delivery met need in the midlands and north of England. Only 85%-91% of housing need was met in the southern regions of England. London delivery remains at less than half of need. 

During the 12 months to September 2021, planning consents were 7% higher than completions across England. However, southern regions and the West Midlands saw between 9% and 37% fewer consents, constraining the supply of development land and future housebuilding.  

Issuance of Help to Buy (HTB) loans reached a record 55,649 in the year to March 2021 – equivalent to a quarter of all new build completions – as buyers sought to complete before the final May deadline for HTB in its current form. HTB loans issued in Q1 2021, the last full quarter before deadline, were about 17% higher than an average quarter in 2019.

By comparing HTB loans and EPC figures, we estimate that the proportion of all new homes built that were purchased with HTB loans had grown from 18% in 2014 to 21% in 2020, before reaching 24% in Q1 2021. 

Build to Rent starts fell slightly from their recent peak in Q2, while completions continue to grow steadily. Starts were down 5% in the year to Q3 2021 compared to Q2, but remain 19% above the average of the last three years. Annual completions grew 5% compared to the previous quarter. 

The persistent lead of starts over completions shows that the construction pipeline for BtR units continues to expand, albeit at a somewhat slower pace than previously. 

Delivery of affordable homes fell by 15% in 2020/21, but is set to recover in 2021/22, according to early NHF data. 

In line with previous forecasts, delivery of affordable homes in the year to March 2021 was 15% below the previous 12 months, according to new figures from DLUHC. The largest fall was in affordable rental homes, at 17%. Affordable ownership and social rent held up a little better, declining by 13% apiece.

By contrast, NHF’s first quarterly data for 2021/22 saw completions run at their highest level since before the pandemic. If maintained for the rest of the year, we can expect to see a rebound in affordable delivery.