British housebuilders are urged to construct more and higher-quality homes, while the government is called upon to simplify a convoluted planning system to address a persistent shortage that inflates prices, according to the competition regulator’s findings released on Monday after a year-long investigation.
Chief Executive Sarah Cardell of the Competition and Markets Authority (CMA) emphasised the necessity for significant intervention in housebuilding across Great Britain to ensure an adequate supply of quality housing where it is most needed.
The CMA also announced its intention to scrutinise whether housebuilders exchange commercially sensitive data, potentially compromising competition.
Major players in Britain’s housebuilding sector, including Barratt, Bellway, Berkeley, Bloor Homes, Persimmon, Redrow, Taylor Wimpey, and Vistry, witnessed a 2% decline in the equity index of UK housebuilders (.FTNMX402020) during early trading, with shares of the largest firms experiencing the most significant drops.
While the Home Builders Federation refrained from commenting on the CMA’s investigation into data sharing, it welcomed the attention on the “fundamental barrier to delivery” posed by the planning system.
Housing scarcity has long been a contentious political issue in Britain, with property shortages leading to soaring costs, particularly affecting younger voters who struggle with high rents and find homeownership increasingly unattainable.
The government’s pledge to deliver 1 million new homes by an upcoming election is on track, but it will fail to meet its target of constructing 300,000 net new homes per year in England by the mid-2020s, as indicated by last year’s construction figures, which fell well below expectations, according to the CMA.
The opposition Labour Party, currently leading in polls, has committed to overhauling the planning system.
The CMA’s new investigation coincides with challenges posed by rising interest rates and living costs, which further strain individuals’ ability to purchase homes.
Russ Mould, investment director at AJ Bell, expressed concern, stating that a regulatory probe is the last thing the sector needs.
While the CMA acknowledged that housebuilders’ potential anti-competitive behaviour isn’t the primary cause of market issues, it raised concerns that such practices could be undermining competition and influencing new home prices.