Scotland’s new build starts plummet by 24% in a year

Scotland’s new build starts plummet by 24% in a year

0:01 AM, 12th February 2024, About 3 weeks ago 1

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Scotland has experienced a dramatic fall in new build starts across all sectors in the last year, a report reveals.

DJ Alexander Ltd, Scotland’s biggest lettings and estate agency, analysed the most recent quarterly housing statistics until September 2023.

It found that new build starts fell by 24.4% from 21,534 in 2022 to 16,274 the following year.

This is the lowest annual figure for all sectors at the end of September since 2014.

Even during the pandemic to Q3 2020, there were 19,051 starts.

Private sector saw new build numbers decline

The data reveals that the private sector saw new build numbers decline by 18.8%, but the most significant drop happened in the social sector, which saw a yearly slump of 40.5% between September 2022 and 2023.

Just 3,292 new builds were started in the social sector in the latest year, compared to 5,535 the previous year.

This is the lowest number of new build starts in the social sector since the data collection began in Q2 1996.

‘We have housing emergencies in our two largest cities’

The firm’s chief executive, David Alexander, said: “At a time when we have housing emergencies in our two largest cities and also in Argyll and Bute it is worrying that new build starts should have declined so much.

“The reasons for the decline in the private sector could be to do with delays in planning, rising costs, anticipated lower demand due to the cost-of-living crisis and the increase in mortgage costs in the last eighteen months.”

He added: “But this is still concerning given that in some parts of the country demand remains extremely strong.

“Any reduction in future supply will simply exacerbate that demand and result in substantially higher prices in the coming years.”

Reduction in starts should set alarm bells ringing

Mr Alexander continued: “But it is the reduction in starts in the social sector that should set alarm bells ringing.

“Given that these statistics relate to the time prior to the announcement of reduced funding for affordable housing in the December Scottish Budget, this is a sign that the number of properties being built was already slowing.”

He added: “With tens of thousands on social housing waiting lists, and demand in the private rented sector at an all-time high, the situation will only worsen in the coming years if the volume of new social housing is cut even further.

“We need more social housing, more private rented sector homes, and more housebuilding in general if demand is to be met.

“Without these houses there will inevitably be soaring demand, higher rents, higher house prices, and many more people unable to find the home they want or can afford.”

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Andrew Morris

11:10 AM, 12th February 2024, About 3 weeks ago

The owner-occupier buyers market has a saturation point. That is being partly met by landlords selling up. Many estate agents have said this accounts for a large percentage of what they have listed. As such, new build is of less importance. But this strategy is cannibalising overall housing stock. Rental stock reduces with no investment strategy to replenish it, quite the opposite. With Section 24 and 3% stamp duty (and in Scotland, the rent cap), the government are encouraging the sell off of rental stock and discouraging investment. For those who rent, this is a problem, as they will have less choice at higher rents.

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