The government is set to miss its one million homes target by more than a quarter of a million following the decision to leave the EU, Shelter has warned.
The analysis by Capital Economics for Shelter found that the government will be 266,000 homes short of the one million 2020 target.
Post-referendum uncertainty looks set to put the brakes on the big housebuilders with the projections warning of an 8% fall in housebuilding over the next year.
As a result, by 2020 we still won’t be building as many homes as before the 2008 crash.
Shelter has also put forward a number of proposals in a new report outlining the possible steps the government can take to meet the one million a target and revitalise the house building market.
These include directly commissioning housebuilding by small and medium sized firms, making access easier to suitable plots of land for building and giving local communities the power to force land owners to make space available for new homes.
Campbell Robb, Shelter’s chief executive, said: “We welcome the government’s target to build a million homes by 2020, but without significant reform of housebuilding in England this won’t be met.
“We can’t repeat the mistakes of the last downturn by continuing to prop up a market which hasn’t delivered, and is too dependent on a few major players to build enough homes. In an uncertain post-Brexit landscape, the new government has a real chance to take the bull by the horns and put in place measures that will not only stimulate housebuilding, but boost the economy too.”
The report urged the government to avoid repeating the mistakes of the last housebuilding slump after 2008, when smaller housebuilders were forced out of the market and successive governments focused on pushing up house prices rather than getting more homes built.
The charity is calling on the government to take advantage of historically low interest rates and create a Growing Britain Fund to invest in new homes and infrastructure.
With bigger housebuilders agreeing that they can’t meet the government’s targets alone, this includes unlocking the potential of smaller construction firms through a Help to Build package. This would support them to get hold of land, including from the public sector.
“Only significant reform of our house-building market will build the homes we need, but with vision and ambition, we are confident that the new government can meet their target and give back hope to a generation struggling with sky high housing costs,” said Robb.
Recent research by Yorkshire Building Society found that the UK has missed its house building targets by a whopping 1.2 million since 2004.
In 2015, the government set the UK house building target by pledging to build one million homes over its five-year term. However, only 142,890 homes were built in 2015, 29% less than the 200,000 homes needed to reach the one million target by 2020.
There are fears that first-time buyers are being squeezed out of the market due to the dwindling supply of suitable homes and ballooning property prices.
According to the latest Nationwide House Price Index, annual house prices rose 5.2% to a new record high of £205,715 in July.
Tougher affordability checks from lenders and rising house prices have also made it increasingly difficult for first-time buyers with smaller deposits to get on the property ladder.
Low interest rates combined with the economic recovery have done little to reduce the need for rented housing, while house price inflation ahead of wage growth has pushed property prices out of reach for many.
