Impact of slow house building in Scotland

Statistics show new-build completions in the year to June 2021 are up 10 per cent on the previous 12 months, but still well below pre-pandemic levels.

The report by the Scottish Government outlined completions of local authority and private-led builds both increased over the previous year, housing associations completed builds on 620 fewer homes. However, this continued slowdown has had a significant impact on the availability of affordable housing in Scotland.

Affordable housing at a premium

While completions of affordable housing in the year covered in the statistics have now bounced back almost to pre-pandemic levels, for the third year running the number of affordable new builds approved fell sharply, and the number of affordable new builds started also decreased. A fall in approvals can only lead to more reductions in future completions, putting further pressure on a sector where supply is significantly outstripped by demand.

Only 1,897 affordable homes were started between October and December 2021, fewer than in the same quarter for the three previous years. This trend is likely to have a significant impact on housing provision for those with low incomes if not addressed as a matter of urgency.

Also concerning is a sharp fall in housing association approvals which have dropped below the 2015 level. Housing association completions also fell, though local authority completions have bounced back from a drop during the pandemic and local authority starts also rose slightly.

Impact of short supply

18,974 new build homes were completed in Scotland across all sectors in the year to end of June 2021, By contrast, 21,603 homes were completed in the year to end of June 2019, the last full year before COVID-19 impacted the industry.

While it is good to see these numbers increasing, Propertymark remains concerned about the impacts of a shortage of supply on the housing market, particularly for affordable housing. We will continue to monitor the situation and press for greater urgency from the Scottish Government in tackling this growing problem.

The Scottish Government has committed to building 100,000 affordable homes by 2032 – but reflecting on its latest update, there is still some way to go, not only to meet their ambitious targets but to meet the continuing demand for suitable homes.

Whilst we have seen an increase in the completed number from the previous year, it is disconcerting the numbers still fall far short of pre pandemic levels and with building costs escalating and issues with lack of supply, there is little confidence that we are going to see a sudden upturn in the numbers. The Scottish Government must now prioritise their commitment to invest in homes of all tenures as an increase in housing supply will help to stabilise house prices and rents.

Daryl McIntosh Policy Manager | Propertymark