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Private house building, rail and energy sectors buck political turmoil

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Few targets have been as well publicised at the government’s challenge, pursued with vigour during Theresa May’s period in office, to achieve 300,000 new homes a year by the mid-2020s. Two new housing surveys give us useful and generally optimistic indications on how we are doing.

The first snapshot, this quarter’s figures, from the Home builders Federation and Glenigan indicate that revisions to the National Planning Policy Framework, permitted development and help-to-buy are working. They have produced an increase in supply which is unprecedented in recent years.

Last year, 222,000 homes were added to the housing stock and builders had a form of planning permission for nearly 370,000 new homes in 2018, the second highest annual total on record. Taking a lead from the MHCLG, the industry, the report claims, has invested heavily both in recruitment and training and land. It says that customer surveys show that "quality and satisfaction levels are increasing".

No mention is made of recent Persimmon Homes scandal, which appeared to indicate low build quality and excessive senior director remuneration associated with the balance-sheet friendly help-to-buy programme.

There are two main caveats. Whilst new homes sales numbers are at historically high the second-hand home market is sluggish, marred by Brexit-related consumer uncertainty. Secondly, current permissions, subsidies and land-holdings may ensure a health new housing pipeline for the next two to five years. But after that? Who knows?

The second report, the RICS UK Construction and Infrastructure Market Survey for Q1 2019, confirms that private housing starts are continuing to increase. It indicates that 21% of respondents reported a rise, compared to 20% in Q4. It predicts: "The contribution to growth in workloads provided by permitted development rights is likely to remain a supportive factor".

It reveals that concerns from the industry about planning delays have eased since the start of 2018 and are "now in-line with the average of the past six years". And it notes: "The number of respondents reporting a shortage of skilled labour reached its lowest level in five years. Whilst respondents still struggle to employ all skill sets, particularly quantity surveyors, only 41% highlight this as an impediment to growth"

However, in the public sector, the report reveals, growth slowed in both the housing and non-housing sectors. Workloads in infrastructure were also subdued, with only 11% of respondents reporting a rise, down from 18% in Q4.

Contradicting this trend: "Given Government's focus on HS2 and Hinckley Point C, the rail and energy sub-sectors appear resilient to political turmoil, as respondents expect to see the strongest growth in these areas over the next year."

In contrast to the HBF’s claim of high customer satisfaction, this report states: "RICS research on commercial to residential conversions has identified several areas of concern related to quality and design".

It would appear that the often shoddy standards of the housing and conversion boom of the "Big Bang era", the late-1980s, are not being repeated. The building industry has matured. But the RICS survey calls for a watching brief to be maintained on design quality and regulation of the construction sector.

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