TSI
England sees 10% rise in new homes, still way short of demand
The number of new homes in England increased by 10% from 2012 to 2103, official figures show but experts are still warning that this is not enough to meet demand. The increase to 136,620 new homes still this leaves net house building in England 39% below the 2007/2008 peak of 223,530 new homes. The data from the Department for Communities and Local Government shows there were 130,340 new build homes, 4,470 from conversions and 12,520 from changes of use. There were also 1,330 other gains and a loss of 12,520 through demolition. The data also show that greater London has seen the faster progress with 12% annual growth in the number of net new homes built in the capital. A net 23,580 new homes built in London represent 17% of all those built in England in 2013/2014 with Newham and Southwark leading the way for new homes over the last year, seeing 1,970 and 1,650 extra homes respectively. Andrew Bridges, managing director of specialist London estate agents Stirling Ackroyd, pointed out that nothing else can solve a fundamental shortage of homes in the long run, apart from building more. ‘People are beginning to believe they could be better off at this point next year. But in terms of affording a home, the financial marathon is far from over and this is particularly true in our capital city,’ he explained. He pointed out that while it is encouraging to see such a pick-up for the new homes industry, even with 10% growth per year it would be 2020 before as many homes are being built each year as in 2008. ‘Accelerating this progress will be vital, with even more homes near transport and jobs. Nowhere is this squeeze more tightly felt than in London,’ said Bridges. Research by his firm shows areas in Southwark, Hackney, Tower Hamlets and Newham will lead the way for new homes over the next decade. ‘So the fact that two of these boroughs are already leading London’s home building effort is encouraging. But opportunities abound and the demand is there for hundreds of thousands of new homes,’ he said. ‘London’s economy is moving faster than ever, more than playing its part in the UK’s wider recovery. But keeping that dynamo spinning will require homes for the millions working to make that reality. Developers now appear to be rising to the challenge,’ he added. Continue reading
UK construction industry gets boost from improved home lending
The UK government’s Help to Buy scheme and a renewed willingness by banks to lend to home owners has boosted the construction industry, it is claimed. The latest official figures from the Office of National Statistics shows that output in the construction industry in the third quarter of 2014 increased by 0.8% compared to the previous quarter. The ONS data also shows growth of 2.9% between the third quarters of 2013 and 2014, the sixth consecutive period of annual quarter on quarter growth. Most recently, in September 2014, output in the construction industry was estimated to have increased by 1.8% compared with August 2014, following a fall of 3% in August and an increase of 2% in July. On the year, the picture is of continued growth, with output in the construction industry increasing by 3.5% in September 2014 compared with September 2013. Housing, as a sub-element of all construction output, was worth £6.77 billion in the third, up 5% on the second quarter and 22% higher than in the third quarter of 2013. Within housing, output by the private sector has grown 19% since the third quarter of last year, while construction by public organisations grew by 35% on an annual basis According to David Newnes, director of Your Move and Reeds Rains estate agents, The Help to Buy scheme and a renewed willingness on the part of banks to lend to borrowers with smaller deposits played a significant part in boosting demand all across the country, giving first time buyers a better shot at the goal of home ownership. ‘This injected new energy into the construction sector, but although house building is making headway across the pitch, we’re still a long way from seeing the form that was in evidence before the crash,’ he said. He pointed out that households received a welcome boost in the cost of living game with the news that wage growth is beating inflation, but dogged demand for housing must be matched with a new charge of supply if the cost of housing is to be kept within the grasp of new buyers. ‘House price inflation may have been reined back from the intensity witnessed earlier this year, but in the long term building new homes remains key to ensuring that competition over available property and price rises stay at healthy levels, and don’t eat away at consumer confidence,’ he explained. ‘Higher LTV lending dipped last month, as new loan to income caps came into force. We need to ensure that the bottom of the market stays firm, anchored on a solid bedrock of plentiful supply of starter homes,’ he added. Andrew Bridges, managing director of specialist London estate agents Stirling Ackroyd, believes that gradual progress won’t be enough for the construction industry. ‘This growth is still slower than the rest of the economy and not yet fast enough to capture the true scale of opportunity,’ he said. ‘Homes are most sharply sought after, and that’s reflected in the best figures for the housing portion of output… Continue reading
Global economic outlook and general election impacting on UK property markets
A more challenging domestic and global economic outlook and political uncertainty in the lead up to next year’s general election are having an impact on property price growth in the UK. According to the latest analysis report from Knight Frank while the first interest rate rise for years is now expected in the second half of 2015, the UK economy is facing additional challenges from overseas. It points to the continued problems in the Eurozone, the withdrawal of quantitative easing in the United States and the fact that global economic growth has also slowed to a six month low. ‘It is a combination of these factors which prompted the Bank of England to push back its expectations of when the first base rate rise will occur. With a much more benign outlook for inflation, the markets are now pricing in a rise in October 2015, with the expectation that the base rate will still only be at 1% well into 2016,’ said Grainne Gilmore, head of UK residential research at Knight Frank. ‘As a result of the new outlook for interest rates, mortgage rates have receded again, which is good news for home buyers and those re-mortgaging their home. However there are also factors weighing on the mortgage market which are likely to feed through to slower activity, such as the new loan to income criteria from the Bank of England, as well as the new rules for mortgage applications under the Mortgage Market Review started in April this year,’ she pointed out. The analysis report also points out that UK house prices rose by 0.5% in October, with the annual rate of growth slowing to 9%. Prime central London house prices remained static in October, the first month in four years in which no growth was recorded. Annual growth in prime central London prices slowed to 6.5% and rents in the prime Home Counties market fell by 0.8% in the third quarter of the year but the annual rate of growth moved into positive territory at 0.1%. ‘Residential property price growth is slowing across the country, including prime central London where the political uncertainty in the run-up to the election, especially over a potential mansion tax, is tending to weigh on activity,’ added Gilmore. The report records that prime central London prices did not rise in October, but are up 6.5% year on year. But price growth in the prime central London market continues to moderate amid growing political uncertainty in the run-up to next year’s general election. ‘The election is primarily causing unease because of the property tax measures which depend on the outcome. Both Labour and the Liberal Democrats have pledged some sort of tax on higher value properties, whether a ‘mansion tax’ or a re-banding of council tax,’ explained Gilmore. ‘Ed Balls, the shadow chancellor, pledged that those in homes currently valued at £2 million to £3 million a year would not pay more than £250 a month, or £3,000 a year (after tax) as part… Continue reading
