UK housebuilders warn against politicians' 'unachievable' targets

More than two-thirds of UK housebuilders believe delivering more than 180,000 new homes a year is "unachievable" under current market conditions, despite ambitious pledges made across the political spectrum in the run-up to the general election.

Housing policies have become a key campaign battleground given the UK's chronic undersupply of homes. In their manifestos appealing for votes at the May 7 poll, Liberal Democrats pledged to increase housebuilding to 300,000 units per year, while Labour said it would get 200,000 homes built annually by 2020. Conservatives, who have historically shied away from outlining housebuilding targets, pledged 200,000 new homes for first-time buyers and to boost "Right to Buy" home ownership.

About 120,000 homes were completed in the UK in 2013-14 according to the Office for National Statistics - well below the 200,000-300,000 a year that academics and economists claim are needed. But a survey released by Knight Frank on Monday has found that 67 per cent of British housebuilders believe that they are unable to build more than 180,00 homes a year.

"Development levels are increasing, but demand for housing continuesto outpace supply," said Grainne Gilmore, Knight Frank's head of UK residential research, adding that housebuilders had called the target of 180,000 "unachievable" in the current market climate.

As the UK economy continues to recover, so too has consumer confidence and with it appetite for new homes. Jon di Stefano, chief executive of Telford Homes, an Aim-listed London-focused housebuilder, said the company was experiencing extremely strong levels of customer interest in more affordable parts of London, where the majority of its developments are located.

"There has been no let-up in demand and a real lack of supply in the areas where we operate and where the market actually needs to start delivering, unlike in pricier areas where there has been a cooldown in recent months," he said.

"Its been good fun watching the politicians come out with these housing figures as none of them can explicitly lay out how exactly they are going to hit their targets."

He believes that after several years dedicated to demand boosting initiatives such as Right to Buy, politicians now need focus and to come to a consensus on how to invigorate sustainable supply. According to Knight Frank, just 9 per cent of respondents said it would be possible to deliver more than 200,000 homes annually under current market conditions, casting doubt over party targets.

Taylor Wimpey chief executive Pete Redfern said ahead of the group's annual meeting last week that politicians should focus on addressing underlying constraints to sector growth, which he called "far more important than some headline number".

"This isn't about instant pre-election policies it's about creating stability in the market. It is possible for this country to build consistently and sustainably, but parties must aim for a number that is sustainable through all economic conditions and cycles," he said.

The biggest policy change that would help boost development volumes would be recruiting more people to Local Authority planning departments in order to ease a bottleneck in applications, according to 82 per cent of respondents to the Knight Frank survey.

But some analysts have noted that in the wake of the 2008 financial crisis, many of the UK's listed housebuilders also appear reluctant to expand. Mr Redfern said in a trading update last week that apparent demand could be as much as 10 per cent higher, yet Taylor Wimpey would be sticking with existing growth plans of 5-6 per cent, according to Robin Hardy of Shore Capital.

"A lack of construction resource is presented as the cause and while to some extent valid, the restriction feels more strategic," he said.

Taylor Wimpey, Barratt Developments and Persimmon, the three largest listed housebuilders, together built 40,801 homes during 2014, just a quarter of output, with small, privately owned housebuilders producing much of the rest.

With housing a more-hotly contested issue in this election than any other since the post-war period, the developers are likely to face further pressure as voters prepare to go to the polls. Last week research by YouGov found that two thirds of English adults believe the number of new homes built should be increased, with a further two fifths saying the figure needed to rise "significantly."

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