With a major announcement on housebuilding ahead, newly released research reveals only a fifth of households can afford to buy the average new home in the south-east of England alone.
Savills says the housebuilding industry is on track to deliver the government’s target of 1m new homes by 2020 – but there remains an annual shortfall of 104,000 homes in the areas with the highest demand, London and the south-east.
Earlier this week research released by conveyancing search provider Search Acumen suggested that – on current trajectory – the shortfall of new homes in England alone will reach more than one million by 2022.
The Savills research suggests “much more land” must be released by local planning authorities to lower land values and enable new homes to be sold at an affordable price.
It also calls for more new towns to be built, such as Ebbsfleet in Kent.
To ensure 40% of households can afford a home in the south-east, the property would have to cost no more than £250,000.
The average house price in London is £435,000, while the average price in the south-east is £290,000.
And prices are far outstripping earnings.
All areas of London have a house price to earnings ratio of more than 10:1; the average across England is 7:16.
The most unaffordable council areas outside London include Hertsmere, Cambridge, Sevenoaks, Epping Forest, and Windsor and Maidenhead – where average house prices are more than 13 times average local earnings.
Chris Buckle, a researcher at Savills and co-author of the report, said: “In the south we are still building relatively low volumes in relation to high demand. We need to make new housing much more of a mass-market product.”
Affordable housebuilding across the UK halved between 2015 and 2016 from 61,050 to 29,163 homes, partly due to a rush to complete properties before the end of the Affordable Homes Programme in March 2015, government figures show.
Construction of affordable homes is expected to pick up to 40,000 this year, but this is still below the levels of more than 50,000 seen in 2011 and 2012 when the for-sale market slumped and housing associations acquired homes that housebuilders were unable to sell.
They also bought shared-ownership properties that were not selling and turned them into affordable rentals, said Buckle.
Savills is calling for more “mass-market” sites and highlighted three large locations in areas of high housing demand where homes are cheaper. Picket Twenty in Andover, Hampshire, Berryfields in Aylesbury, Buckinghamshire, and King’s Reach in Biggleswade, Bedfordshire, are each up to 15% cheaper than local market pricing per square foot.
Buckle said affordability was less of an issue in the north of England, where 45% of households are able to buy a home, with quality posing a bigger problem. “You need high-quality housing in the north to attract the businesses and workers,” he said.
He added that build to rent was gaining traction with 17,000 rental homes completed, 24,000 under construction and 55,000 in planning.
The impact of Brexit on build costs and skilled labour could push modern construction methods, such as the use of factory-made components, into the mainstream, the report says.
Live Verde, the modular housing division of WElink Energy, the renewable energy group, has ambitions for five factories in the UK producing 25,000 homes a year by 2022.