South East – Residential Development Review, 2023

The South East Residential Development Review for 2023 discusses the current state of the residential development market in the South East of England. The introduction highlights the impact of recent events, such as the mini-Budget in September 2022, which led to a slowdown in sales and development. The planning environment is also identified as a challenge. One notable decline in the region is the decrease in housing delivery, with a 16% fall in the number of Energy Performance Certificates granted to new homes compared to the previous year. This drop in output can be attributed to a decrease in demand caused by the rising cost of mortgage debt. Additionally, the lack of clarity surrounding planning policy has led to some local authorities pausing local plans, resulting in a delay in land allocation for development. The sentiment around the UK planning system has worsened, as evidenced by a survey of volume and SME housebuilders, with 80% of respondents citing planning delays as a key issue. In the South East, more than 20 councils have delayed their local plans, representing around 40% of all councils in the country that have paused or delayed plans. The constrained pipeline of new homes in the South East is a cause for concern, especially considering the growing demand to live in the region from untethered commuters and employees in the life sciences sector. The South East is forecasted to be at the forefront of the UK's economic recovery, with strong employment prospects contributing to the need for new housing. However, the supply of new homes is falling short of housing needs. The region added 42,140 net additional dwellings to housing stock in the previous year, which is lower than the requirement for more than 50,000 homes per annum. This creates a housing shortfall of around 7,860 homes. Boosting housing numbers will be challenging given the current economic and policy backdrop, as local authorities in the South East need to reconcile required growth and infrastructure with Green Belt boundaries. Forward-looking indicators suggest that housing delivery will continue to be constrained unless conditions improve. Planning pipeline data shows a significant decrease in the number of housing units granted full planning permission, both nationally and in the South East.