Sharing his analysis following the Spring Statement of what the government’s measures to boost the property market might mean for the target of generating economic growth, Rathbones’ Alan Dobbie (pictured) said:
With October’s Budget leaving very little fiscal headroom and the OBR’s economic growth forecasts for 2025 proving too optimistic, today’s measures are more about keeping the wolf from the door, with more significant fiscal measures expected later in the year.
Amidst the challenges, there were some positives. The announcement of £2 billion in grant funding to build up to 18,000 new social and affordable homes was welcome. The Government’s commitment to building 1.5 million new homes was a key manifesto mission. While this target is highly ambitious, the actions taken so far suggest it is not an idle pre-election pledge. We’re pleased that two long-standing bottlenecks – planning and a shortage of skilled labour – are now being addressed.
On planning reform, the Government has already made changes to the National Policy Planning Framework, streamlining the process, reintroducing mandatory housing targets, and freeing up grey-belt land. These measures should, in time, unclog the system. On recent results calls, housebuilder management teams, a group not always known for being glass half-full, sounded relatively encouraged regarding the measures announced so far.
The recent announcement of £600 million in investment to train up to 60,000 more skilled construction workers is a step towards addressing the labour skills shortage. While more needs to be done, this investment should help increase the pace of development and create high-quality jobs. We are pleased that the Government recognises the importance of the housebuilding sector to the country’s economic fortunes and continues to prioritize this growth agenda despite the tight fiscal position.
With significant efforts to improve the two key supply-side issues—planning and labour shortages—measures to improve demand could follow. While the well-known Help-to-Buy scheme had its flaws, new initiatives to stimulate demand are desirable given ongoing affordability issues and the need for economic growth. Despite the fiscal challenges, we are hopeful that the Government will keep its mission to kickstart economic growth right at the top of its agenda.
