Are more affordable homes enough to tackle the housing crisis in Wales?

The Welsh government pledged to build more social homes to tackle the ongoing “housing crisis”, but does the government’s entire housing supply strategy need a rethink?

In 2021, the welsh government pledged to build 20,000 low-carbon social homes for rent in Wales by 2026, in order to tackle the housing shortage and energy concerns.

According to 2011 research commissioned by the Welsh Government over 14,000 new homes are needed every year in Wales for the next 15 years to meet demand.

A report by the Home Builders Federation in 2023 The number of units approved in Wales during Q1 2023 totalled 1,480, a 40 per cent decline from the year previous.

Meanwhile in 2021-22, 2,676 additional affordable housing units were delivered across Wales, a 26 per cent decrease from the previous year.

Earlier this month, a report by public sector watchdog Audit Wales revealed the Welsh Government was unlikely to meet its 20,000 social homes target without significant additional spending

However, A new report by planning and development consultancy Lichfields argues that the government needs to look beyond the 20,000-home target to successfully target the housing crisis.

The report, titled “Affordable housing in Wales: Does more or less really mean more?” suggests that overall housing delivery should increase in order to improve housing affordability.

It claims that “under-delivery of new homes lies at the heart of the problem” compounded by “higher interest rates, increased construction costs and greater regulatory costs”.

It goes on to outline the barriers to achieving the 20,000  low-carbon social housing home target, but argues that current efforts do not address the underlying shortage of total housing supply.

Key recommendations from the report include:

• Adopting a more robust methodology in identifying future need for both affordable and market housing
• Facilitating higher levels of private sector housing delivery
• Revising housing requirements in Local Development Plans to more accurately identify future levels of housing need.
• Greater collaboration between public and private sectors to overcome viability challenges and support sustainable housing growth.

In England, deputy prime minister Angela Rayner last month unveiled mandatory housing targets for all councils to meet Labour’s targeted 1.5 million homes. 

The new mandatory housebuilding target under Labour would rise to 370,000 a year from rise from 300,000.

Rhiannon Harrop-Griffiths, a planner at Lichfields and co-author of the report, said: “Our findings show a need for a shift in strategy.

“By increasing the overall housing stock, the Welsh Government can both increase the stock of affordable housing and improve affordability across all sectors, making housing more accessible to a wider range of people.

“Simply focusing on low carbon social rent in isolation risks perpetuating the shortage of homes across all tenures. 

A more holistic approach that balances the need for social and affordable housing with private market housing would not only help meet the diverse needs of Welsh communities but also stimulate economic growth through job creation and rebalance communities where young families are excluded from the housing market.”

Gareth Williams, a Senior Director at Lichfields, added: “Our research shows that a restrictive definition of affordable housing and a lack of focus on broader housing delivery are hindering progress.

By widening the scope to include different housing types and market dynamics, the Welsh Government can better balance supply and demand, ultimately alleviating pressure on the housing market.”

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