Quarterly Housing Statistics reveal 24% drop in new home starts

Quarterly Housing Statistics for the end of December 2023 found there were 20,992 all-sector new build home completions and 16,017 starts in Scotland last year. There were fewer homes completed (2,701 fewer; 11% decrease) and started (5,009 fewer, 24% decrease) in 2023 than in 2022.

Private sector starts at 12,752 homes, were at the lowest level since 2020 when the Covid-19 pandemic impacted housebuilding through health protection restrictions, before this, 2013 was the lowest number.

Housing association new build starts (2,073 homes) in 2023 were at the lowest number since 1988. Local authority starts (1,192 homes) in 2023 were at the lowest number since 2013.

Fewer new build homes were completed and started across the private and social sector in 2023 compared with 2022. Private sector house completions decreased by 9% (1,449 homes), housing association completions decreased by 12% (534 homes) and local authority completions decreased by 30% (718 homes). House starts decreased in the private sector by 20% (3,258 homes), as well as in local authority-led starts (49% decrease; 1,152 homes) and housing association starts (22% decrease, 599 homes).

When comparing Quarter 4 of 2023 to Quarter 4 of 2022, there were decreases in the number of new housebuilding starts through the private sector (8% decrease; 254 fewer homes) and housing associations (16% decrease; 62 fewer homes). Whereas local authority-led starts increased by 9% (35 additional homes).

There were also quarterly decreases compared to the previous year in new housebuilding completions led by the private sector (12% decrease, 582 fewer homes) and housing associations (35% decrease; 447 fewer homes) but a 28% increase in local authority-led completions (105 additional homes).

Statistics for the Affordable Housing Supply Programme have also been released which reflect the broader supply of affordable homes for social rent, affordable rent, and affordable home ownership, and include off-the-shelf purchases and rehabilitations as well as new builds.

In 2023, there were 6,239 approvals, 6,046 starts, and 9,680 completions of affordable homes.

When comparing 2023 with 2022, decreases were reported in affordable housing supply approvals (316 homes, 5% decrease), starts (1,546 homes, 20% decrease), and completions (493 homes, 5% decrease). It should be noted that completions in 2022 were the highest on record, and the 2023 figures are comparable to 2019 (1% higher; before the pandemic impacted housing building) and 2021 (1% higher).

Affordable housing supply approvals were the lowest since 2012, starts were the lowest since 2013 and completions were the lowest since 2021.

When comparing Quarter 4 of 2023 to Quarter 4 of 2022, approvals increased by 5% (60 homes), starts decreased by 20% (257 homes) and completions decreased by 33% (903 homes).

These statistics are used to inform progress against the Scottish Government’s affordable housing delivery targets. The ambition is to deliver 110,000 affordable homes by 2032, of which at least 70% will be for social rent and 10% will be in remote, rural and island communities. There has been a total of 17,619 affordable homes completed between 23 March 2022 and 31 December 2023 towards the target of 110,000 affordable homes by 2032, consisting of 13,483 (77%) homes for social rent, 2,126 (12%) for affordable rent, and 2,010 (11%) for affordable home ownership.

Housing minister Paul McLennan highlighted external factors for having an impact in the decrease of new homes.

He said: “Scotland has delivered more than 128,000 affordable homes since April 2007, over 70% of which were for social rent, in turn helping to create strong, sustainable communities.

“In the year 2022-2023, Scotland delivered by far the most affordable homes per head of the population of any country in the UK – 69 per cent higher than the rate in England, building on our track record of doing more than any other part of the UK to provide and keep social homes.

“There’s no doubt that inflation, supply chain issues and labour shortages linked to Brexit have created a challenging environment which is reflected in today’s statistics. We will continue to work with local authorities, housing associations to increase the delivery of more affordable homes, the majority of which will be for social rent, including supporting acquisitions of existing properties. Despite UK Government cuts to the capital budget, the Scottish Government also continues to invest heavily to support housing supply.”

Callum Chomczuk, national director for CIH Scotland, said the statistics are “devastating for anyone in need of a home”.

He added: “Over the last twelve months we have seen falls in affordable housing approvals, affordable housing starts and affordable housing completions. Most concerningly affordable housing supply approvals are at their lowest since 2012 and new starts are the lowest since 2013, both of which signal we are likely to see an ongoing crisis in our housing and homelessness system.

“Compounding this is the £200m cut in the affordable housing budget which comes into effect next week.

“It is clear that our housing and homelessness system is at risk of systemic crisis; it needs political intervention, and we need funding for more social housing. Only by building more social homes can we address Scotland’s growing housing emergency.”

Shelter Scotland said the country is at risk of losing more social homes than it builds each year and described the decline in social housing delivery as an “inevitable consequence” of successive cuts to the housing budget.

The charity added that the possibility of losing existing stock due to issues with RAAC, as seen recently in Aberdeen, and social landlords struggling to bring older properties up to modern standards raises the prospect of Scotland’s overall social housing stock starting to decline.

Shelter Scotland director, Alison Watson, said: “Now that the post-pandemic backlog has been cleared, we’re starting to see the consequences of a tightening housing budget; by every measure social housing delivery is slowing down drastically.

“Approvals and starts on social homes have been declining for years, and that trend continues in these figures. Given that, the drastic fall in completions was inevitable.

“These figures don’t even reflect the effects of the latest 26% cut to the housing budget which prompted widespread dismay across the housing sector.

“Just recently we’ve seen social homes in Aberdeen removed from the stock due to issues with RAAC and it’s likely that same scenario will happen elsewhere. Meanwhile, social landlords are struggling to bring older properties up to current standards so there’s a very real risk that soon Scotland will be losing more social homes than it builds.

“That’s a daunting prospect in the middle of a housing emergency and it’s why we’re calling on the Scottish Government to rapidly deliver an emergency action plan, which acknowledged the urgency of the situation and sets out an effective strategy to address it.”

Jane Wood, chief executive of sector body Homes for Scotland, said: “The Scottish Government can no longer ignore the country’s housing emergency and must take the urgent action required to address it. With four local authorities having already declared local housing emergencies, alongside today’s figures, what further evidence does the Scottish Government require to act?

“Frankly, Scotland’s population and the sector that provides homes for our communities deserve better than the same tired response that Brexit, cost price inflation and Westminster are the main causes of the housing crisis.

“Of course, these are significant issues, but nowhere near as pressing as the challenges posed by an underfunded and under-resourced planning system which takes over 62 weeks to process a major housing application or the overall policy and regulatory environment which currently serves to hamper the delivery of new homes rather than promote them. Both of these are entirely within the control of the Scottish Government.

“Today’s figures further highlight the interconnected nature of the housing delivery in Scotland, which demonstrates the need for a healthy private sector to support the delivery of social homes.

“Rather than benchmarking a less bad completions rate against other parts of the UK, now is the time to take the bold action required to support housing delivery across all tenures. The Scottish Government must now surely take its head out of the sand, accept we are in the midst of a housing emergency and take ownership for addressing it.”

The Scottish Federation of Housing Associations (SFHA) said the Scottish Government’s programme for building affordable rented homes is in “absolute freefall”.

Sally Thomas, chief executive, said: “Scotland desperately needs the homes that housing associations provide: they are safe, warm and affordable homes for rent. Today’s figures show that the number of these homes being delivered are in absolute freefall. And this is before the Scottish Government’s devastating £196 million cut to affordable housing has even taken effect.”

“We know that government is keen to attract more private investment, but we’re concerned that this isn’t a solution. Social homes need government investment if we’re not to burden housing associations with debt which will force up rents.

“The Scottish Government has a target to deliver 110,000 homes by 2032 - the hopes of achieving that are now all but over. We need them to restore the much-needed funding and urgently work to forge a credible path out of our national housing emergency.”