Brexit Uncertainty Restricts Residential Developments
Despite the Government’s desire to solve the housing crisis by building 300,000 new homes per year by the middle of the next decade, it would seem that developers and home owners are reluctant to embark on construction projects as planning application numbers decline in the second quarter of 2019.
According to Office of National Statistics (ONS) data involving planning applications in England, in the year to June 2019, authorities undertaking district level planning applications received 443,700 in total. This figure equates to a 5% fall in the number of submitted planning applications when compared to the 465,000 submitted in the year to June 2018.
These figures also represent the lowest number of applications in the year to June for over a decade as Brexit uncertainty puts the breaks on residential developments.
Between April and June this year, planning departments in England received 114,200 applications, down 4% on the second quarter of 2018.
91,700 decisions were granted, a 3% decrease from the same period a year earlier. Overall, 10,900 residential applications were granted in the second quarter of 2019, an 8% fall compared with 2018’s figures.
Commercial property also struggled in the second quarter of the year with the 2,200 applications received for commercial approval representing a 1% fall.
In the year to June 2019, district level planning authorities granted 355,000 decisions for both residential and commercial developments, a 5% fall in approved applications. Of this number the 6,200 granted applications involved major residential developments, a 4% drop in activity over the course of a year.
Based on the most up to date figures indicating that 162,270 new build developments were started in the year to March 2019, a 5% drop in residential developments could see a decline of 8,113 new build starts in the future.
Whilst it is predicted that a decision involving the UK’s position in Europe is thought to inspire more confidence in the property market which will spark increased impetus to develop property, the short term decline in property construction could see the Government struggle to meet their housing targets.
Caroline Robinson, commercial real estate business development manager at Search Acumen, commented:
“Today’s government figures show that 2019 is turning out to be one of the worst years for planning applications since the Financial Crisis. While this is worrying, it should not be all that surprising. Given the political and economic morass the Brexit debate has left the market in, it is only natural that real estate developers are not willing to expose themselves to further risk.
“Commercial real estate planning and development can be a slow and complicated process at the best of times. The wait-and-see approach planners, lawyers and developers are being forced to take is not only holding up developments, but it’s also hindering much-needed investment into processes and technology that could create efficiencies through the whole supply chain. Westminster needs to demonstrate leadership. The industry can’t be expected to build on sands shifted by political tides.”
Will a clear Brexit outcome release the shackles on the property market? Or, will uncertainty linger for the foreseeable future?