So RICS has just announced that house price inflation is likely to hit 6% this year, revised from 3%, and it’s all down to the lack of available properties. It’s a double whammy for anyone trying to get on the property ladder or wanting to move, especially when you factor in the average price of a house currently just over £200,000.
In the first four months of the year just over 125,000 new homes were built in England. That figure is half as many properties required to keep up with demand, and the National Housing Federation estimates that there is a shortfall of more than 500,000 homes. Lack of housing stock means that many people are stuck renting and in some parts of the country rents are rising sharply. It becomes a vicious circle that seems impossible to break – how can you save for a deposit when you have to pay high rent?
It seems that the dark days of the 2007-8 financial crash are still having an impact. When the banks stopped lending, buyers couldn’t get mortgages, builders couldn’t sell new developments – everything ground to a halt. Think back and you’ll probably recall seeing developments in your area part way through construction and being left unfinished for a long time. The knock-on effect of this was, needless to say, a shrinking workforce in the construction industry – some 250,000 workers left or lost their jobs. Now the industry is faced with a serious skills shortage – it’s probably never been a better time to be a good bricklayer, carpenter or joiner than right now, such is the demand for skilled workers. It also means that someone somewhere needs to be thinking about how we ensure the UK workforce is in better shape.
But it’s not all doom and gloom!
For a start, there is the good news that the Government’s Help to Buy scheme seems to be making a positive difference in helping first-time buyers get on the property ladder. With 4,745 homes sold in June, it’s the highest monthly total since the scheme launched in April 2013. In that time over 110,000 mortgages have been arranged under Help to Buy, either via the mortgage guarantee deal or the equity loan scheme. Good news indeed and the scheme is definitely addressing the needs of those who want to invest in property.
Another issue that is being addressed is that of planning. Building companies often face a constant onslaught of local council demands that must be addressed before the first brick can be laid – some developments can be delayed by up to five years for this reason. However, steps are now being taken to speed up the planning process. It’s going to be some time before anyone can say the process is smooth, but any action that gets new housing built a bit quicker can only be applauded.
We may be some way off a boom period, but there is a light at the end of the tunnel.