Wales’ housing supply crisis requires ambition and action

Tim Grey

Wales is in the grip of a housing supply crisis, with an urgent need to boost the number of new homes being built across the country.

The figures are stark. The last financial year, 2023/24, saw the second lowest number of new home completions (4,771) since records started in the 1970s. Only 2020/21 was lower (4,616), when homebuilding was stopped during the first Covid-19 lockdowns.

What’s more, housebuilding activity in Wales has declined steadily over the last few decades, while across the border in England it has increased.

This week is New Homes Week, an annual campaign by the Home Builders Federation to raise awareness of the benefits of building new homes.

There’s certainly an awareness of the need to build new homes in Wales, and plenty of talk about increasing supply. The Welsh Government is determined to build more affordable homes, and just this week it announced an additional £10m in funding for affordable home schemes across the country.

Under supply

While this is positive, the Welsh Government also needs to acknowledge that there’s a significant under supply of new homes available on the open market.

The reasons for this are many and varied. New building standards designed to improve energy efficiency have had an impact on the way new homes are built. Installing air source heat pumps, solar panels and better insulation are good for the environment but add significantly to build costs, which can’t be absorbed by developers, and ultimately will have to be passed on to home buyers through increased house prices when affordability is already a huge problem.

The Welsh Government is determined to reduce the carbon footprint of homes as part of its net zero agenda. This is an admirable aim, but the burden of legislation on housing developers is huge. A balance must be struck between the aims of the decarbonising agenda and the reality that Wales desperately needs to provide mores homes for its citizens.

Lack of resources

Local authorities are very keen to progress new housing developments, but many are suffering from a severe lack of resources, which often leads to long and unnecessary delays to proposals. The process to gain planning consent is a slow one at the best of times, but this is being exacerbated by a shortage of experienced planning officers. If there were more people working in planning departments to progress the applications more quickly, then developers could build more houses and costs would fall.

There’s also a shortage of sites available for new housing development, leading to fierce competition between developers. This isn’t a Wales-specific problem, but in England the government has at least proposed reintroducing the requirement for local planning authorities to calculate a five-year supply of land for housing. Since this requirement was removed in Wales in 2020, local authorities have had less accountability when it comes to housing delivery. Reversing this would be a positive step.

National target

Another positive step that the Welsh Government could take would be to set a national target for all home completions. While there’s a target to deliver 20,000 new affordable homes during this Senedd term, there isn’t one for open market homes. The UK government has set an ambitious goal of building 1.5 million new homes in England over the next five years. Why doesn’t Wales have similar ambitions?

The recently announced extension of the Help to Buy Wales programme to September 2026 is very good news. This scheme has been a huge success and the industry welcomes this action to assist new homebuyers who only have a small deposit available.

The bottom line is that action needs to be taken quickly at national and regional level to encourage new housing developments if we are to increase supply and ensure there are enough affordable and open market homes to meet the growing demand.

Tim Grey is Sales Director at Llanmoor Homes, a South Wales-based housing developer