New housing pipeline surges

The planning pipeline for new-build private housing expanded at its fastest rate in over a decade in 2016. Glenigan’s new research shows that the number of units included in detailed planning applications submitted during last year leapt by more than half. Glenigan’s economics director Allan Wilen said: “With red tape on planning being cut back by the government, restrictions on social housing provision loosened and government subsidy for both developments and enabling infrastructure available, housebuilders are clearly in an optimistic mood with regards to developing new homes through the planning system.” There are also underlying indications that housebuilders are increasing the ratio of apartments to housing in their applications, as attempts to develop the private rented sector begin to have an impact. In 2004, 34% of the units in the planning pipeline were apartments. That ratio slowly began to shrink over the next decade as housebuilders were saddled with a glut of unsold stock in urban areas such as London, Leeds and Manchester. Over the next decade, the proportion of flats in the pipeline slumped and dropped below 11% in 2015. In 2016, the ratio only firmed to 12% but the apartment pipeline grew at a far larger rate than either of the other two main house types. While the number of houses in the pipeline leapt 59% and OAP housing rose 31%, the number of apartments in the planning pipeline ballooned by 82%. “This is an indication that attempts to develop the private rented sector are working as the bulk of units in PRS are typically going to be apartments rather than houses as this is what will appeal to tenants,” added Mr Wilen. Glenigan’s research, which covers detailed applications submitted during 2016 for private new-build housing only, shows a total pipeline of 135,278 units. That is the highest total achieved since 2004 when the number of units in the pipeline reached 164,197 only for a dramatic implosion to ensue due to the financial crisis. Within four years, the pipeline had halved with detailed applications collapsing by a third in 2007 alone. However, after the fall-out from the financial crisis, there was relatively steady growth until 2015, when Glenigan’s data showed a significant slowdown as commercial residential developers held back on planning applications. Many housebuilders, particularly the large volume builders, trimmed their landbanks to close to four years as uncertainty over the Brexit vote created uncertainty in the property market but those fears now appear to be dissipating.