A proposed large-scale council house-building program in the United Kingdom could result in a net decrease in the total number of homes constructed, an expert has warned. Andy Burnham, a prospective prime minister, outlined a vision for his premiership that emphasizes affordable housing funded by the state, drawing inspiration from his 1970s childhood.
Burnham's plan involves utilizing vacant public land to reduce costs and focusing on higher-density development in existing towns. This approach aims to revitalize high streets while preserving green spaces. He also suggested that a future government under his leadership would seek greater public control over essential services, including housing, water, energy, and transport, over a decade.
However, Lucian Cook, head of residential research at Savills, expressed concern that this initiative might divert investment away from private developments. Housebuilders are already facing significant viability challenges due to rising wage and material costs, coupled with a struggling sales market. Cook told BBC Radio 4's Today programme that such a shift could lead to a decline in overall housing construction levels. He noted that the government's target of 1.5 million homes during the current parliamentary term was widely considered unrealistic, with Savills' own projections suggesting a figure closer to 840,000 homes.
"Clearly it is a good thing that you get more affordable housing but the reality is you need more housing across all tenures if you are really going to address some of the underlying affordability issues in the housing market," Cook stated.
Recent figures indicate a slowdown in the housing market. The Bank of England reported that mortgage approvals for house purchases dropped to a two-and-a-half-year low in May, with 56,200 approvals recorded, down from 66,000 in April. This figure is below the six-month average of 63,300 and represents the lowest number of approvals since December 2023. Remortgaging approvals also saw a decrease.
The decline in mortgage approvals, seen as an indicator of future borrowing activity, occurs against a backdrop of rising mortgage rates. These rates have increased following global events, leading to financial uncertainty. Property listing site Zoopla reported that three in five homes listed for sale since January have not yet sold. Buyer inquiries have reportedly fallen by 15% compared to the previous year, with significant drops in demand observed in regions like the West Midlands and the North East.