Savills says an increase in the number of new builds bought for buy to let and other property investment will help developers recover from the demise of the Help To Buy scheme.
However, there may be a difficulty with the constriction industry being able to meet demand from investors and others.
Emily Williams, associate director of research at the agency, comments: “Despite the upcoming end of Help to Buy, there remains considerable appetite for new homes, and we expect delivery of affordable and private rental stock to expand to fill the gap left by Help to Buy.
“But the ability of developers and investors to build new homes is currently being limited by a lack of suitable consented land. There needs to be a continued effort to deliver more consents in high demand areas.”
Savills, in its latest housing market forecast, predicts that housebuilding volumes will not recover to pre-pandemic volumes until 2016 and even then delivery will be 60,000 below the government’s 300,000 homes per year target.
Delivery peaked in 2019/20 at 220,000 homes and fell to 190,000 in 2020/21. Volumes are expected to sink to 180,000 in 2021/2 and only recover 2019/20 volumes in 2026.
Starts slowed due to Covid but were already falling pre-pandemic, in part because housebuilders began to anticipate the end of Help to Buy, often shifting focus to smaller sites deliverable before the end of the scheme.
Also, sites gaining permission have been skewed to lower demand markets, with supply highly constrained in high demand locations. Renewed government commitment to delivering more homes in the north of the country suggests this is unlikely to change, the agency suggests.
Savills says: “Build to Rent is the only part of the private housebuilding market we expect to be significantly bigger in 2025/26 compared to 2019/20.
“Delivery rose from 7,000 to 14,000 between 2016/17 and 2019/20. A further doubling would give us an expected 30,000 homes within five years, equivalent to 14 per cent of all new homes completed in 2025/6. There may be opportunities for the sector to expand further, certainly tenant demand is not lacking.”