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England now needs 260,000 new homes a year!
In the 10 years since a major housing review report warned that at least 210,000 new homes a year needed to be built in England, an average of just 115,000 have actually been built. According to the author of the original report, Kate Barker, it means that the country is now one million homes short of what was needed to adequately house its population and prevent a worsening affordability crisis. Her latest report for the Home Builders Federation says that to put this into perspective, this shortfall is now equivalent to the number of homes in Birmingham and the surrounding areas. And reducing the long term trend and gradually pricing households back into the market will now require 260,000 private housing starts per year, some three times the number completed last year and a figure achieved in only four years since World War II. Even achieving the least ambitious of Barker’s three objectives, to slow down the rate at which households are priced out of the market, would require more than 200,000 private starts per year, a figure last achieved in 1973. ‘The Barker Review was a seminal report for housing and starkly illustrated the scale of the emerging crisis. Since then successive governments have failed to pay heed and develop policies to deliver the homes the country needs,’ said Stewart Beaseley, executive chairman of the HBF. ‘Whilst the Help to Buy Equity Loan scheme is finally starting to drive demand and significantly increase supply, we start from a very low base and the shortfall is huge,’ he told the organisation’s Policy Conference. ‘As we approach a general election, we now need to see all parties committing to policies that lead to a sustained increase in house building. We have to build our way out of the crisis. Building the homes the country needs will provide the decent homes people deserve and create hundreds of thousands of jobs,’ he added. Barker told the conference that the continued shortfall in housing supply matters most to those who lose out in the battle for dwelling space. She explained that even 10 Milton Keynes would only deliver 30,000 home a year, nowewhere near what is needed. ‘At the moment the cost is falling heavily on many families in the private rented sector. It is vital to raise the rate of new supply but also to develop coherent policies to address the consequences of the supply shortfall,’ she added. Continue reading
UK property prices up 6.8% year on year, latest ONS data shows
UK house prices increased by 6.8% in January compared with a year earlier, taking the average home price to £254,000, according to the latest data from the Office of National Statistics (ONS). This is a monthly increase of 5.5% compared to December 2013 and the price growth was seen across all parts of the UK. House prices grew by 7.1% in England, 6.9% in Wales, 1.4% in Scotland and 2.7% in Northern Ireland. London is again showing the highest growth at 13.2%, followed by the South East at 7.1% and the West Midlands at 5.3%. Excluding London and the South East, UK house prices increased by 3.8% in the 12 months to January 2014. The data also shows that on a seasonally adjusted basis, average house prices increased by 0.6% between December 2013 and January 2014. It means that first time buyers, regarded as an essential part of the property market recovery, are paying more. The ONS figures show that in January prices paid by first time buyers were 7.6% higher on average than in January 2013. For existing owners prices increased by 6.5% for the same period. According to Peter Rollings, chief executive officer of Marsh & Parsons, with the average UK house price now over £250,000, it means that the bulk of transactions are within the 3% stamp duty tax band and this will provide yet more ammunition for critics who believe the Chancellor played a bad hand by not reforming stamp duty thresholds in last week’s budget. ‘The London property market is still soaring ahead, with a 13.2% annual house price increase which dwarfs that in the rest of the UK. The average property price in the capital is now over three times that in the North East. Unwavering demand from UK and overseas buyers is a key ingredient behind this rate of growth, and Prime London property continues to be a Mecca for property investment,’ he explained. ‘And with pensioners now freed from the shackles of annuity, the buy to let market could become a Holy Grail for retirement, offering unrivalled tax efficient investment,’ he added. David Newnes, director of Your Move and Reeds Rains, part of LSL Property Services, pointed out that momentum is growing as lending has increased substantially in the last yea. ‘This is largely thanks to the combination of consumer confidence, an array of attractive mortgage deals and a real willingness on the part of banks to lend to borrowers with smaller deposits,’ he said. ‘Pricing is being driven by greater lending availability, positive consumer sentiment as the jobs market continues to improve along with the wider economy. Cheaper rates and increased high LTV lending has encouraged more first time buyers to invest in property,’ he added. But he warned that rising demand for housing must be matched with rising supply if the government is to bring the cost of housing within the reach of first time buyers. In the context of the cost of living crisis which has been central in the… Continue reading
Majority of IFAs expect UK house prices to rise in next three years
Nine out of ten Independent Financial Advisers expect UK house prices to increase during the next three years. Some 40% of IFAs would increase their own personal exposure to residential if it were easier to do so in a tax efficient way and 42% of IFA clients also more interested in residential property, according to new research. The survey from Castle Trust, which offers investment products that track or beat the Halifax House Price Index, shows that between now and 2019, 86% of advisers expect house prices to rise with one in 20 anticipating a dramatic increase. Also, when looking at the next 10 years, only 6% expect prices to fall and one in 14 think they will rise by over 50%. By 2024, financial advisers on average think that house prices will increase by around 21%, which would add £37,773 to the value of a typical home. According to the survey, the most common barrier to investing in a buy to let property is concerns about tenants or lack of tenants with 51% mentioning this followed by 49% saying it is the deposit and 41% thinking it is a hassle. ‘It is clear that confidence in the entire UK housing market is finally taking hold and is no longer just confined to London and the South East. This is starkly apparent from our own results as we have witnessed record flows into our Housa products, presumably because their returns are tightly pegged to the Halifax House Price Index,’ said Sean Oldfield, chief executive of Castle Trust. He explained that the firm’s Housa products provide a simple alternative to buy to let which has never before existed which opens up the chance for more people to invest in residential property who previously weren’t able to do so. Investors across Castle Trust’s range of Housas have seen growth since they were first launched in October 2012 and its unique Protected Housa investment product which both protects the capital invested and tracks the Halifax House Price Index (HHPI), has delivered capital growth of 3.1% in its first month alone. Oldfield described Housas as a low cost and tax efficient way to get exposure to the housing market. ‘Unlike property funds, there are no upfront or ongoing management fees. Housas typically qualify for inclusion as an ISA, Junior ISA or SIPP with a minimum investment of just £1,000. Investors are eligible for protection by the Financial Services Compensation Scheme of up to £50,000 per individual,’ he pointed out. UK residential property is one of the most stable asset classes. Analysis by Castle Trust reveals that over the last 30 years, it has historically delivered annual returns of about 6% per annum, which is comparable with equities, and superior to commercial property, but with much less volatility than both. Continue reading
