The residents of Lindsey Lindsey must have had quite a shock last year. According to a census update, there were not, as previous numbers suggested, about 390 homes being built each year in their largely rural Lincolnshire district, which surrounds the seaside resort of Skegness; there were 2330.
However, even from the top of the Odyssey – the amusement park’s tallest coaster – you’d struggle to see any sign of these new home tires: not many cranes dotting the skyline or roads clogged with trucks. No boom in the local population. So where are they?
A closer examination of the census data reveals a clue: the recount captured a large number of static holiday caravans parked near the North Sea coast, which it then added to the housing stock.
It’s not clear whether these holiday caravans account for the entire increase or whether there was an undercount in earlier data, or some sort of classification problem, but it points to an uncomfortable and often overlooked truth: we don’t really know how many new homes we build every year in England. And the number depends on who you ask.
For a government with a clear house-building target – 1.5 million new homes by 2029 – this is a problem. And it represents another sector, to add to immigration and employment, where the quality of official statistics is pretty dismal.
If you go to the Office for National Statistics website and download its house building data for England, you will follow a long line of politicians, journalists and even academics using data that is not fit for purpose. Even if you search for the original source – the Ministry of Housing, Communities and Local Government – you’ll end up in a pickle if you click on the wrong link: the most used house building data for this country actually under counts new completions. and in a considerable amount.
The ONS data is based mainly on building inspection figures, a market historically dominated by the National House Building Council (NHBC) – an organization set up to provide guarantees for new homes due to concerns about the poor quality of construction in the 1930s. However, in the last two decades, NHBC’s market share has deteriorated – from about 85 percent to about 60 percent. Although building inspection data has improved slightly since 2017, making it less reliant on NHBC data, a significant undercount remains.
There is a stronger report of new homes, which is published as part of the government’s net housing additions (NAD) reports. This allows us to understand both the extent and location of undercounting in building control data. For example, it shows there were around 158,000 terminations across England in the 2023-24 financial year, while the most accurate NAD terminations data shows there were 199,000 – a 25 per cent change, or 40,000, almost the size of Bath.
The undercount is greatest in areas with a greater variety of home builders. While the long-term trend is an increasing dominance of large, listed housebuilders, the market has actually become more diverse over the past decade. In many places, there was a surge in activity in everything from tiny house builders and housing associations to rental property investors and luxury developers – at least until interest rates started to rise. And it seems they have looked elsewhere for their construction guarantees.
This means, for London, building inspection data is very flawed. For 2023-4, NHBC data shows there were around 16,000 new completions, while NAD figures show there were more than 28,000 – even more comprehensive Greater London Authority data says there were around 32,000 completions. So it appears that Building Control data is missing nearly half of the London house building market!
In markets where traditional residential construction still dominates – for example, suburban developments on the edge of cities, building control data is still quite useful. Although, even in places like Milton Keynes, where there has traditionally been a good correlation between building control and NAD data, there are signs in recent years that it may be slipping, as rental property developers and others move on.
England is not the only country struggling to count how many houses its buildings are: Ireland has overestimated housing supply in the past as it relies on electricity connections to count new properties. Cowsheds, outhouses and vacant houses being brought back into use have contributed to the higher housing supply figures. When the methodology was revised in 2018, it reduced the number by nearly 58 percent.
Measuring the number of homes we are building is not only important because of the government’s housing targets (which are actually based on net additions, a measure that includes changes of use and conversions). Understanding who is building new homes and where is essential to ensure policies are fit for purpose – and not just hitting targets.
It can also affect your investments. A growing number of UK pension funds are investing in residential property, particularly through the build-to-let market. The public’s lack of accurate information about who is building what and where can lead to their investment not performing as expected. Meanwhile other organisations, including a major listed housebuilder, still make frequent references to the figures under London’s building control count to highlight the huge scale of housing shortages in the capital. The rate of undersupply relative to targets is still significant, but not as large as regularly suggested.
And while the NAD data is a clear improvement on the BC numbers, it’s not perfect either. It is published only every year and eight months late. As GLA data for London shows, the lack of historical reviews before 2019-20 means that the data probably undercounts completions as some take longer to register. We also don’t know how far the countdown goes. The late Dr Alan Holmans, an expert on housing statistics, expressed doubts that housing completions in the 1990s – perhaps even earlier – were fully recorded.
To deal with missing entries, the NAD data is revised every 10 years when the latest census is published. However, we do not know whether the missing houses were new or from some other source and we do not know what tenure they are or who built them – hence the collapse in the East East, where the number of houses added to the total accounted for a third of the national adjustment of 5,890 homes per year for the period between the 2011 and 2021 census.
If nothing else, it shows that if the government really wants to hit its housebuilding target this parliament, perhaps it should focus on building static holiday caravans outside Skegness.
Neal Hudson is a housing market analyst and founder of consultancy BuiltPlace
