AnnualReportFinancialStatments2023

Annual Report &

Annual Report & Financial Statements 2023 Market overview Cont. Strategic Report There is a fundamental shortage of homes in the UK, that has been exacerbated by years of significant undersupply of affordable new housing. Levels of home ownership are now lower than they were 20 years ago, and young people are now more likely to be living with their parents for a longer period, as affordability becomes stretched through cost of living increases and higher purchase prices for homes. This shortage of new homes has increased demand in the rental sector driving significant increases in rental costs over the past 2 years. The fundamental desire for people to own their own home is strong, giving a robust long term underpin to the sector. Housing market overview 01 Too few homes are being built The number of new homes (net additional dwellings) across England increased in the year to 31 March 2023 to 234,000¹. However, this is still significantly behind the previously stated Government target of 300,000 new homes delivered each year by the mid-2020’s. The relaxation of the targets announced in December 2023 could ultimately see the number of new homes drop even further as local Councils now have greater autonomy over the number of homes to build. Planning reforms being introduced are likely to constrain the delivery of new homes further and this undersupply will increase pressure on prices. The potential impact is that it will be more difficult for young people and those on lower incomes to own their own home. It has been estimated that 145,000 new affordable homes are required each year to 2031². However, in the last year only 63,000 have been completed, representing 27% of net new dwellings³. Keepmoat’s high quality, affordable homes delivered through partnerships on multi-tenure well designed developments are ideally positioned to service these market fundamentals. With two-thirds of our private customers being first time buyers and our average selling prices substantially below the average new build prices in the regions in which we operate, we build the homes our customers desire, the homes the UK needs. Net additional dwellings in England 350,000 300,000 250,000 200,000 150,000 100,000 50,000 0 2007-08 2008-09 2009-10 2010-11 2011-12 Government target 2012-13 2013-14 (1) Gov.uk Components of net housing supply, England (2) Herriot Watt University, Housing supply requirements across Great Britain for low-income households and homeless people 2014-15 New build completions Net additional dwellings Affordable Housing 2015-16 2016-17 (3) Gov.uk Affordable housing supply, England 2017-18 2018-19 2019-20 Chart: Gov.uk Components of net housing supply, England 2020-21 2021-22 2022-23 One-third of homes are rented 02 03 Over one-third of homes in England are rented (35%). Across the regions in which we operate, this varies from 32% to 39%, with home ownership in the North East being at the lowest level. Overall home ownership is 6% lower than 20 years ago¹. In 2022/23, 21% of dwellings in the private rented sector failed to meet the Decent Homes Standard. This compared to only 14% of owner-occupied houses. In addition, the wellbeing of those living in rented accommodation, measured by average life satisfaction score, was over 10% lower than homeowners. This disparity was greater for those in social rented, at over 14% lower than homeowners. Over 6% of rented dwellings are also reported to be overcrowded, compared to less than 1% of owner occupied homes¹. A strong majority of people have a desire to own their own home (87%) rather than renting (12%)². Housing tenure in the regions we operate, in England (millions) South Midlands West Midlands East Midlands Yorkshire West Yorkshrie East North West North East 0.0 1.0 2.0 3.0 Owned Rented (1) English Housing Survey 2021/22 (2) British Social Attitudes Survey, October 2019 Chart: ONS Dwelling stock by tenure and region, England Young adults living at home is rising The number of young adults between the ages of 18 and 25 living at home with parents in the UK is over 56%. Whilst this fell back from almost 60% in 2021, it is still above pre-Covid levels¹. The average age of first-time buyers is still increasing and is now 33.5 years, an increase of 1.1 years compared to 10 years ago². It still remains the case that the biggest barrier for young people to buy a home is saving a deposit. The average deposit for first-time buyers in the 12 months to August 2023 in the regions in which we operate was over £35,400³ and represents 1.1 times the average salary before tax for this group⁴. As a result, young people in particular are struggling to get onto the housing ladder, increasing the inequality between generations. Total young adults living at home (18-25 year olds) 65% 60% 55% 50% 45% 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 (1) ONS, Young adults living with their parents (2) English Housing Survey, 2022/23 (3) Halifax, September 2023 First time buyer press release (4) ONS, Annual survey of hours and earnings, 2023 Chart: ONS, Young adults living with their parents 24 KEEPMOAT.COM 25