The new social housing sector will continue to suffer from the fall-out of the private housing market as the flow of mixed-use developments and projects part-funded through section 106 agreements remains sparse, according to Glenigan.
Additional funding has sustained the pick-up in social housing starts during the opening months of 2010. Furthermore recent funding approval for the first wave of new council house building saw 2,000 new social sector homes starting on site during March.
Taken together these factors reversed the early weakness in project starts last year, securing a 16% rise for 2009 as a whole, says Glenigan. However, looking ahead to the current year and beyond, the sector is expected to come under growing pressure from a tightening in Government capital funding from the start of the next financial year. Current projections point to a 7% decline in project starts during 2010 with scheme starts remaining weak during 2011.
Furthermore considerable downside risks remain. Under existing Government plans, CLG communities’ capital funding falls by 30% during 2010/11. New project starts are likely to bear the initial brunt of any funding cuts with planned schemes potentially rescheduled or shelved. Further steep cuts in public sector funds are anticipated from 2011/12 as, post-election, the new Government seeks to cut the budget deficit. Under existing Government plans, net investment is set to halve by 2013/14.