SCOTLAND’S economy would be in line for a multi-billion pound boost if housebuilding rates returned to pre-recession rates, with some 12,000 jobs created each year as a result, experts have predicted.
Researchers estimate that more than 25,000 new homes are needed each year to cope with the country’s growing population and a trend towards smaller households, but supply has been failing to keep pace with demand since the financial crisis struck.
‘It is clear housing delivery needs to increase from current levels’
The Scottish Government set a goal in 2007 to raise the rate of new housing supply to 35,000 in a bid to improve affordability – a target that Nicola Sturgeon, now First Minister, described at the time as “ambitious but achievable”.
However, recent official figures show that just 15,436 homes were built in the year to September 2014 – some 40 per cent below the levels seen a decade earlier.
Town planning and economics consultancy Nathaniel Lichfield & Partners (NLP) argues that the shortfall is being exacerbated by the fact that Scotland’s population is at a record high of more than 5.3 million and is projected to keep rising. High birth rates and inward migrations, combined with people living longer, mean the National Records of Scotland has forecast the population will hit 5.78 million by 2037.
NLP director Nicola Woodward, who heads the firm’s Edinburgh office, said: “Since the financial crisis, housing delivery has fallen dramatically in Scotland, with recent output almost 10,000 units per annum below the pre-recession peak.
“If Scotland is to secure a prosperous economic future and meet the needs of its growing population, it is clear housing delivery needs to increase from current levels.”
Two years ago, Audit Scotland published a report highlighting that the number of households north of the Border was forecast to rise by 500,000 to 2.9 million by 2035, and 21,230 additional homes would be needed each year to cope with demand.
NLP’s report says that building an additional 10,000 homes a year would create 12,000 jobs annually, and if this pace was maintained for 15 years it would generate an extra £2.5 billion for the economy.
An upturn in construction activity would also provide an additional £1.4bn in council tax revenue and £28bn of extra spending by residents, “supporting the viability of local shops and services and helping to create new employment opportunities”, the firm said.
However, the Federation of Master Builders (FMB) Scotland recently warned that efforts to address the housing shortfall are at risk unless a “chronic” shortage of skilled workers can be alleviated.
The trade organisation said workloads among small construction firms remained in positive territory during the first three months of the year, but it flagged up a severe lack of carpenters, joiners, plumbers and site managers.
Latest figure from the Office for National Statistics show output in the UK’s construction industry during the first three months of the year was 1.1 per cent lower than the previous quarter, with total housing work down 3.4 per cent.
Woodward added: “Given the scale of the economic benefits which could be delivered, it is essential that the issues constraining supply are resolved. In particular, there is a need for local councils and strategic planning authorities to carefully consider allocations and assess the realistic prospects of delivery to ensure housing delivery meets need and demand.
“Scotland must deliver more new homes in order to help secure a prosperous economic future.”