Zoopla says the number of homes being built in England plunged 62% between April and June as work on building sites was suspended due to the coronavirus pandemic.
With only 15,950 new-build properties completed, the Ministry of Housing, Communities and Local Government stated this was the lowest since records began in 2000.
Building levels had already fallen 5% during the first three months of 2020, ending a seven-year upward trend and this new decline is expected to put further upward pressure on house prices, as brand-new properties already sell for a significant premium compared to homes being re-sold.
Why is this happening?
As the UK entered lockdown in March, all work on construction sites was suspended. Sites later re-opened only in phases and with restrictions in place, affecting the efficiency and speed with which properties could be built.
However, construction workers have since been given permission to work as normal.
Who does it affect?
People looking to use the Government’s ‘Help to Buy’ initiative, which ends in current form on 31 March 2021, were particularly affected by the building slowdown. Initially, to qualify for the scheme’s 20% equity loan, the property being bought had to be completed by the end of December. Fortunately, the Government has since extended the construction deadline until 28 February 2021 to avoid people missing out due to building delays caused by the pandemic.
The current version of Help to Buy will be replaced by a new scheme, limited to first-time buyers, on 1 April 2021.
What’s the background?
According to Zoopla a total of 147,180 new homes were built in the year to the end of June, 15% fewer than during the previous 12 months.
The number of new homes needed each year to keep pace with demand in England is between 240,000 and 340,000, so Government figures showing this year’s overall increase of 243,720 homes are at the lower end of this range.