Shares in housebuilding companies fell on Monday after the competition watchdog published a report detailing its concerns about the sector while launching a new investigation into suspected anti-competitive behaviour.
The Competition and Markets Authority said it suspected that most of the big housebuilders are sharing commercially sensitive information which could be influencing how fast sites are built out and the prices of new homes.
A new probe under the Competition Act 1998 into listed companies Barratt Developments PLC (LSE:BDEV), Bellway PLC (LSE:BWY), Berkeley Group Holdings PLC (LSE:BKG), , Persimmon PLC (LSE:PSN), Redrow PLC (LSE:RDW), Taylor Wimpey PLC (LSE:TW.), and Vistry Group PLC (LSE:VTY), as well as privately owned Bloor Homes.
Also, following a year-long investigation into the sector, the CMA report identified several factors that have led to the "persistent under delivery of new homes" and that it believes the industry needs "significant intervention".
The two main problems are the planning system, which is "complex and unpredictable" and the "speculative" nature of private development, with the study also finding substantial concerns about expensive and unclear estate management charges.
Concerns over the quality of some new housing, where homeowners reporting snagging issues have increased over the last 10 years, were also flagged.
Government recommendations from the CMA include adopting new amenities for all new housing estates, enhancing consumer protections, and establishing a New Homes Ombudsman with a unified consumer code.
Proposed options for consideration are also put forward, including ensuring local authorities introduce local plans with clear, consistent targets that reflect the need for new homes in their area, streamlining the planning systems to allow housebuilders to begin work on new projects sooner but not by watering down protections such as for the local environment.
The CMA said measures to improve the capacity of council planning departments would also enable them to process more applications, while also suggesting that housebuilders could be incentivised to speed the build-out of new homes, as well as to diversify the tenures and types of homes delivered.
Sarah Cardell, chief executive of the CMA, said if the measures were implemented, "we would expect to see many more homes built each year, helping make homes more affordable".
"But even then, further action may be required to deliver the number of homes Great Britain needs in the places it needs them."