Newbuilds ‘on hold’ as stock slumps below pandemic levels
DJ Alexander says Scottish house building has hit a "worryingly low level" north of the border as the population reaches a record high.
Scotland’s newbuild total is now lower than during the Covid pandemic, new figures reveal.
The shocking news comes as it was announced the country’s population has reached an all-time high.
The sector is “now on hold” according to estate agency DJ Alexander, as new-builds have slumped to a “worryingly low level”.
Lowest
The firm, which is one of the largest estate and letting agents in Scotland, says the number of newbuild starts was at its lowest since 2015-16, and the figure for 2022-23 is actually lower than that of 2020-21 during the pandemic.
Just 18,890 all sector newbuild starts began during the financial year 2022-23, which is below 2020-21 when there were 19,344 starts.
On hold
David Alexander, CEO at DJ Alexander (main picture), says: “These figures are a very real concern for future housing supply, and clearly indicate a sector on hold.
“The 2022-23 financial year starts are 23.2% lower than just three years ago and, more worryingly, are even lower than the starts which occurred in the pandemic period.
This is a problem which has been growing for some time.”
“This is a problem which has been growing for some time as the 10-year period from 2008-09 to 2017-18 showed a sector massively underperforming compared to previous decades.”
Crash
Alexander says part of this can be explained by the housing crash of 2008, but there is still a long-term slump.
“We must have a strong, steady flow of building to meet demand and ensure that Scots are provided with enough homes in the coming decade,” he says.
It is more essential than ever that we increase the number of houses.”
“Given that the Scottish population grew by 141,000 over the last decade and has now reached its highest ever figure, it is more essential than ever that we increase the number of houses being built each year.”
Scotland’s population has risen to more than 5.4 million, results from the 2022 census released last week show.
It would be interesting to see a breakdown of who is building. If Scotland reflects the rest of the UK, it will show a collapse in SME activity, which dropped significantly during the GFC and hasn’t recovered much.
There’s a multitude of factors but perhaps the most important is the lack of small sites: the Government’s redesignation of backland development as “brownfield” c. 2010 was a major factor, as is the tendency of LPAs to privilege big sites and forward promotion of sites in their strategic plans, with little or no thought given to the needs and timing of SME developments. Most SMEs pick up sites ad hoc when they appear on the market, not years in advance to suit the timetable of a 15 year strategic planning review.
The sheer volume and diversity of documentation now needed with each planning application also make it extremely expensive for SMEs on a per-plot basis, which makes them disinclined to take the risk of a failure, and of course S106 and CIL demands hit small builders especially hard. In my area of outer SE England, it’s an astonishing £365 per m2, borough-wide, which hits the cheaper areas much much harder: £36,500 in flat rate CIL tax for a very ordinary 100m2 new house, straight off a builder’s bottom line!