THE Scottish Government's home-building targets are at risk of falling decades behind, if urgent action is not taken to increase public investment and tackle the current mortgage crisis, according to a report published by housebuilders' group Homes f
or Scotland.
With a dramatic reduction in new work being started, and a slump in new-home sales of up to 50 per cent this year predicted by the NHBC, the organisation cautions that it could take as long as 17 years for Scottish new-home completions to recover to their 2007 level of 25,000 a year.
And Homes for Scotland predicts the Scottish Government's target of 35,000 new-build completions a year will not be reached until 2032, unless growth in the sector can be pushed above 5 per cent through investment and changes to the mortgage market.
It also says that attempts to revive the market will falter unless efforts are made to help the sector retain and train skilled tradesmen beyond 2010, when any upturn might occur.
Commenting on the report, the organisation's chief executive, Jonathan Fair, said: "Our analysis confirms the devastating effect the credit crunch is having on the delivery of much-needed new homes across all tenures in Scotland. These scenarios must be a wake-up call to anyone who thinks the housing market is simply experiencing a 'necessary' short-term correction."
And in delivering his organisation's gloomy message, he called for immediate action to halt the slump: "The Scottish Government must think strategically and massively accelerate its Affordable Housing Investment Programme to bring forward the delivery of new homes in 2009-2010," he said.
"In addition, there is an immediate need to expand its wider public infrastructure spending and also leverage out the maximum benefit from its already pre-funded reskilling and retraining programmes. Maintaining the skills base within our sector is essential if speedy recovery is to be possible."
Commenting on the report, Scottish communities minister Stewart Maxwell said: "We have been engaging closely with Homes for Scotland, including through the Housing Supply Task Force, and we recognise that housebuilders are experiencing great difficulty at the moment.
"We have listened closely to their concerns and, against the context of the tightest spending settlement from the UK government since devolution, taken decisive action to support housebuilding. The £100 million of spending we are bringing forward from our Affordable Housing Investment Programme will accelerate the development of affordable housing in Scotland, stimulate activity and help to maintain employment and skills in Scotland's construction industry.
He continued: "However, as Homes for Scotland have recognised, the UK government holds the major levers needed to address the issues at the root of the current downturn. We have pressed them to respond quickly to the recommendations of the Crosby Review when it reports.
"We cannot know at this stage how quickly housing supply will increase in the years ahead. However, we are focused on creating the conditions needed for recovery, particularly by ensuring that the planning system frees up enough land to meet current and future housing need and demand."
The Homes for Scotland report begins its forecast with an assumption that completion figures for 2009 are likely to fall to a level nearing 9,000. It does forecast an upturn in sales in 2010, but because of a loss of capacity in the industry, with the departure of skilled tradesmen and managers, predicts that these will reach just 12,000.
From here, according to its prediction, the government target could be reached by 2018 if growth of 10 per cent is achieved. But it maintains that this prediction is optimistic, given the perilous state of the industry and historical precedent.
According to figures obtained by the organisation from the government's Communities Analytical Services, the housing sector has rarely achieved growth of over 5 per cent per annum over a sustained period. During the 1980s, growth reached around 3.2 per cent and from 1992 to 2007, it was 2.7 per cent. But the report notes: "The government data shows that there have been periods of large-scale growth in housing in Scotland – for instance the1930s, 1950s and 1960s.
"However, these have all been fuelled by corresponding large-scale public housing investment, which lends support to the view that achieving 18,000 completions in 2010 will probably depend on significantly increased public investment in housing."
Last week, Homes for Scotland told MSPs that in the first half of this year, 15,000 jobs had been lost in the housing development industry. It followed this up with a stark estimate that this number could have increased to 30,000 in the months since.
