2016 looks as though it might be another successful year for the property market. Provided of course we don’t succumb to a certain Chinese Bear, in the next few months. January’s announcement the government will commit to 13,000 new homes on brownfield sites in the South East beginning this year represents the largest commitment by government to public housing since the regeneration of East London’s Docklands in the late 1980’s. With the conservative administration ‘pulling out all the stops’ to reach its target of 1 million new homes by 2020.
Elsewhere construction as an industry is having something of a purple patch with private construction forecast to rise some 5.5% over the coming 12 months. Alongside this the Construction Products Association estimate that overall productivity will rise 4.2% this year and a further 3.5% next.
So far so rosy, but is it all good news? As with any projection hailed from the rooftops it isn’t without its caveats and Naysayers.
The First major doubt arises from the capacity of the construction industry to deliver on its targets. While George Osbourne’s pledge to construct 400,000 new homes across the UK no doubt has developers from London to Cumbria salivating, it remains to be seen whether the construction industry can cope. Many within the industry have cited a shortage in cheaply available key materials and skilled personnel as key barriers to growth of the kind being forecast by central government.
A further dampener on the otherwise sunny predictions is the accusation that these new developments will be a postcode lottery. With developers increasingly cherry-picking the best brownfield sites (for best read within the capital’s sphere), it’s likely that any social good these developments serve will be confined to the already deluged market in the capital. This comes at the expense of those regions which are crying out for expansion and development, the former ports and mining towns of the North East being a particularly glaring example.
The ‘postcode lottery’ has a further aspect. Namely the difference in planning outcomes from case to case, region to region. The figures given work on the assumption that planning permission will be obtained smoothly or even at all. As anyone who has ever had an extension built will attest this is far from guaranteed. These developments will vastly differ in scale and local importance depending where they are. The impact on old industrial eyesores in East London is going to be incomparable to the impact on the community of a small village in the Valleys. For these reasons success is far from guaranteed.
Thirdly and perhaps most crucially a sense of balance needs to be brought to the argument. The much vaunted 5.5% increase in private development must be counterbalanced against the CBA’s projected 5% drop in public housing development. Rather unsurprisingly the investment appears to be falling where it is least needed. Which poses the question how far a 0.5% drop in growth (when private and public development are combined) represents a positive projection? Spin aside, it remains incontrovertible that these projections are still a long way from the kind of figures we were talking about in the boom years 1990-2008.
So a real mixed bag objectively, it’s not too much of a stretch to suggest that your reception of these figures will have much to do with your political affiliation. For the moment the jury is very much still in session on how 2016 will pan out for the property industry.