Dearth of planning applications signals housing shortages and soaring prices

Published 14th Nov 2009

A sharp decline in planning applications for housing developments has raised fears of a chronic property shortage and steeper house-price increases.

Figures seen by The Times show that the number of applications has fallen by half since January. Only two housing schemes with more than 500 properties have been granted planning consent since the beginning of the year: one in North London and one in Thornton-Cleveleys, Lancashire.

Planning applications across Britain were down 54 per cent in the first nine months of this year compared with the same period a year earlier, according to Glenigan, the construction analyst, despite an injection of £1.5 billion in cash from the Government into the housebuilding industry.

Glenigan said that, while there were signs that falls had begun to stabilise since the summer, the flow of applications remained “extremely weak”.

Housing economists have warned that the downturn could leave a legacy of smaller developments and fewer properties per scheme, as housebuilders struggle to obtain the finance.

The average number of dwellings per planning approval has shrunk by 10 per cent, the figures showed. The number of applications for medium-sized schemes, between 50 and 500 homes, has also fallen more steeply than applications for projects of fewer than 50 houses, down by 54 per cent compared with a fall of 45 per cent for smaller developments.

Allan Wilen, economics director at Glenigan, said: “There has been a significant drift down in size and number.”

Housebuilders have resumed work on mothballed schemes as the market has improved in the past three months. However, they remain cautious. Many have shied away from schemes with a large number of one and two-bedroom apartments and are instead focusing on three and four-bedroom family homes.

Miles Shipside, director at Rightmove, the property search website, said: “Every year that goes by, we are falling behind, so existing stock becomes more valuable. Ironically though, it will be price rises that help builders back into production.”

Local councils are struggling to meet the national housebuilding target of three million new homes by 2020. Official figures show that only 90,430 new homes were started in 2008 and 2009, down 42 per cent on the previous year and 62 per cent below the 240,000-a-year target. This month, the Conservative Party outlined proposals to give local authorities control of housing supply — a move that it says will lead to the provision of more homes.

Source: ' Times '

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