Demand for new housing is set to outstrip supply by over 500,000 homes by 2015

By 2015 demand for new housing will exceed supply by such a degree that a city the size of Birmingham would need to be built to redress the balance, a study by the Federation of Master Builders has found.

The FMB found that the shortfall in housing supply would be over 500,000 units in four years time.

The study found that total completions would rise from 106,000 this year to 123,000 in 2015, resulting in net addition of 884,000 housing units. However, the DCLG predicts that because of population growth there will need to be an additional 1.4m households over the period.

“We know that there is capacity within our existing communities to create all the new homes we need,” said Brian Berry, director of external affairs at the FMB. “Small building companies are often best placed to develop these micro sites and help meet housing demand. However, the average cost of building on such sites is some 70% higher than estate housing which is partly to do with economies of scale but also because of the Government persisting with policies that were designed during the housing boom.”

Data from the NHBC showed that the number of active house builders who had built fewer than 500 units fell to 3,824 in 2010, the lowest since records began in 1982.