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Government 鈥渘et additions鈥� figures for the 12 months to 31 March 2021 - a period which covered the first initial lockdown in spring 2020 - found that 216,489 homes were added to supply in the year, down 11% from the 242,702 in the previous year, and the lowest level on record since 2015/16.

The forward-looking indicators that we monitor in the market hinted at the results, but this marks confirmation of a fall in the delivery of new homes, encompassing new-build development, conversions of one residential property into several units and change of use 鈥� where property used for another purpose such as an office is converted into a residential property. It ends a seven-year positive streak in rising net additions since 2013/14.

The figure includes an 11% drop in new build completions.

Permitted development change of use accounted for 10,603 homes, down 14% on year. Office to residential accounted for 8,768 homes, down 17%.

Before the outbreak of Covid-19 in March, completion volumes had been steadily ticking upwards and this was reflected in the 1% increase in net additions for the 12 months to 31 March 2020.

In London, net additions fell 9% year-on-year in 2020/21 to 37,183.

New build completions accounted for 32,957 of net additions, down 11% from last year. 

Net additions in London had previously risen 12% year-on-year in 2019/2020 to 40,870.

Future supply

While the drop in output is significant, overall delivery in England is still around 50% higher than during the last economic downturn in the wake of the recession in 2009/10.

That said, output is now 28% below the government鈥檚 annual target of 300,000 additional homes a year.

More timely data capturing energy performance certificates (EPCs) granted to new homes, which can be seen as a lead indicator for completions, highlights the impact of the pandemic in 2020 and also points to a recent dip in output this year.

While output had recovered to pre-Covid levels earlier this year, in recent weeks delivery has slowed again, as materials shortages and rising build costs limit output, despite strong demand for new homes. Over the past two months, from the start of September to early November, output has been 12% lower than the same period in 2019.

Government data shows that construction costs for new housing were up 22% in the year to September.

, and almost two-thirds of housebuilders said supply chain issues were now hitting their bottom line, with scarcity of materials driving record costs.

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