According to the Guardian, around 240,000 new homes are needed annually in order to meet demand, whilst in the last financial year just 108,190 have been added. One area in which demand for new housing stock is in family homes, something that won’t be going away in a hurry.
Considering family houses make up around only 15% of the local market, supply is bound to be relatively low. However, the current demand is exceeding all expectations.
This year, the introduction of the Help to Buy scheme has started to increase housing stock and this has also meant that borrowing is up, especially amongst first-time buyers. However, this isn’t the first scheme that the government has launched which is intended to increase supply, with last year’s NewBuy scheme falling way short of its target figure of 100,000 house sales
In fact the scheme had accounted for a paltry 1522 sales by the end of the year, according to figures from the Construction Products Association. This means that many in the property industry don’t have much faith in whether Help to Buy will considerably push up supply in the long term.
2013 housebuilder’s survey
A recent study into the supply of homes indicates that the biggest overall demand is for three-bedroom houses, with 95% of builders saying that these are in moderate or high demand.
This is especially true in the South East and the Midlands and it was also found that the new bedroom tax is discouraging housing associations from building larger, four or five bedroom family homes.
Home builders report that the demand for houses of this size has also risen, with 87% of the industry reporting high demand compared with 77% in 2011.
“There is no doubt that the industry faces challenges in the current climate. Curtailed funding, planning confusion, onerous levies and economic turbulence mean we are still navigating a difficult period. However there are signs of optimism, and the green shoots can clearly be seen in our survey. We expect development volumes to rise modestly over the coming year, especially in the delivery of larger, family homes,” Gráinne Gilmore, head of Knight Frank UK residential research said.
However, this will depend on government behaviour and the reintroduction of regional building targets which could help offset “CIL contributions against Section 6 responsibilities”.
Optimism within the industry
According to the report, there is some optimism being felt in the home building industry for the year ahead, although there remain “significant headwinds facing the sector”. This is in part because of new regulations being rolled out across the UK and the study suggests that to overcome this, it’s necessary to provide continued support for buyers.
Doing so will help to increase construction in coming years and whilst this won’t be enough to bridge the gap between supply and demand, it will certainly help.
In order to address the crisis, it’s important to make homes as accessible as possible. In order to do this, we need to respond to the crisis by looking at the country as a whole. Older people are now spending longer in family homes, as they become more independent and naturally want to live out their days in a familiar place.
This means that a long-term strategy and approach is necessary to address the housing shortage, in order to come up with practical solutions that will work over time. There is no overnight solution to the lack of family homes and so the government needs to look to the future and work out a long-term plan.
Article by Armun Peeroozee, Lettings Manager for Hunters West Hampstead branch. Follow Armun on LinkedIn by clicking HERE.