Lack of housing supply
The lack of housing supply is a story that just will not go away, numbers of properties currently available per estate agent have fallen again from 55 in July to 38 in August, we are actually at an 11 year low for properties available. Where we look to find the reason for the imbalance at present is quite a task in itself, housing in general is in short supply in both the privately rented and the social housing sectors.
While numbers of those looking to buy dropped over the two months there is still alot of pressure on UK property prices, especially in the South East and London, the UK property market just keeps going from strength to strength.
So a phenomenom is happening whereby fewer houses are being sold to the likes of first time buyers because they are just not affordable, the figures just do not add up for them when it comes to applying for a mortgage, so less activity at the bottom end of the market due to unaffordability is causing prices to rise, that can’t be right? First-time buyers who are unable to afford their first home will be pushed to rent property in the short to medium term thereby increasing demand for property and pushing prices higher again, this is something of a vicious circle.
The other factor in all this is the buy-to-let market which still appears to have legs even after the intervention of the government with new tax rules applying to landlords income to be introduced soon, added to that lenders are beggining to tighten up further on lending to the BTL sector in an effort to take the pressure off house prices, however without those landlords who will supply the houses to rent to those FTB’s who are unable to buy for themselves.
Even further up the property ladder there is a blockage due to those looking to downsize not being able to find a property to downsize to, so for present they are sticking with the property they are in, even though it is too big for them now the family has flown the nest, they are trapped due to lack of supply in their price range.
The government has a massive task on their hands to rebalance the housing shortage both in the rented sector and that for those who wish to buy their own homes, affordable homes that is. Successive governments have been promising to build more new homes, action is needed now, figures of 200,000 homes being built per annum were mentioned at the beginning of the parliament, lets hope it happens.