Public Housebuilding Index: Austerity means less capital investment and a fall in activity

While private housebuilding is set to rise this year, public housing is not likely to enjoy such growth in 2013.

The CPA/Barbour ABI public housing index for February was 21% higher than January. It sounds good, but take the seasonality out of it as January is generally quiet, especially so this time given the poor weather. Public housing contracts were 13% lower than a year ago. The austerity cuts have left the communities department with nearly two-thirds less capital investment than it had in 2010/11 and the government doesn’t even talk about social housing. It concentrates on “affordable” housing at 80% of market rent, which isn’t particularly “affordable” in London, and is primarily provided by private sector.

Housing associations are looking at bond issues and raising finance by selling to the private market to fund affordable housing, especially in London. However, while housing associations in the capital can benefit, it is unlikely those that focus on other parts of the country will do so as much. As a result, we can expect falls in public housing activity over the next six months.