Building the new homes Scotland needs an “enormous challenge” say JLL

By Isabelle Grange

March 2, 2016

Scottish-Flag

Government money not enough to fund supply of new homes needed says report by international property consultants…

Not enough homes are being built in Scotland either to meet the Scottish government’s present targets or to satisfy current demand. That’s what major property consultancy firm JLL states in a new report called Rising to Challenge.

It says 15,260 homes were built in the year leading up to the second quarter of 2015. That’s less than half the Scottish government’s present target of 36,000 homes. In the five years leading up to 2007/8 the average number of homes built was 21,170.

In the five years leading up to 2020, the report states the number of households in Scotland is set to increase by 74,000 with 10,400 in Glasgow and 15,100 in Edinburgh. This illustrates, say JLL, that demand will be far higher than supply even with the increased funds for the Scottish housing sector.

JLL director, Jason Hogg said: “Instead of unbridled momentum, there will be many challenges in 2016 including residential issues to be addressed. The biggest question is how the Scottish government and the housebuilding industry, progress in building the extra homes Scotland needs. Development activity has improved yet it’s still far short of the 23,000 homes target. Scottish government funds also help but we feel closer industry cooperation, more helpful initiatives in addition to greater funding should be considered in order to address the current shortfall. New legislation in 2016 will also rebalance the relationship between tenant and private landlord. It remains to be seen what implications this has for the wider market or if rent cap powers will be implemented by local authorities.”

Further research by JLL showed sales prices in Edinburgh rose by 3.5% during 2015. Another 22.2% rise is expected by the end of 2020. Average rent rises are expected to be 6.3% and 22.8% over the same respective time periods. Edinburgh’s “sparse” pipeline of new homes is also mentioned with predictions that outer-lying areas such as West Edinburgh and Leith will increase in popularity.

For Glasgow, house prices rose 4% on average in 2015 with rents increasing 5.6%. The next five year forecast suggest increases of 19.3% and 19.9% respectively. Glasgow’s housing shortage was noted by JLL though they added that 2016 will see many key projects progressing. However, Hogg warned that “Changes to tax relief and the LBTT mean that private sales and the development markets in Scotland’s major cities need to adapt to a less favourable private investor environment.”

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