According to the Knight Frank Housebuilding Report 2015, the supply of new houses is falling ‘well short of demand’. UK property investment may help boost supply, but with a rising population and a lack of available housing, will the housing market ever be able to keep up with demand?
Over 160 respondents from leading house builders and developers across the country were surveyed to produce Knight Frank’s market-leading report.
The report outlined a clear demand for a sustainable way to help boost development volumes in order to keep up with demand. Read the full report…
“Activity in the housebuilding sector has continued to pick up over the last year, but the supply of new homes is still falling well short of demand. Boosting supply, where new housing is most keenly needed, is a key priority if the UK housing market is to avoid long-term distortion,” Knight Frank, Housebuilding Report 2015.
In terms of delivery, there is a dramatic imbalance between the supply and demand chains. According to the report, in the year to April 2014, around 141,000 houses were built in the UK. This figure represents a 4% annual increase when compared to the previous year.
Despite a rise in construction, it is thought that an additional 230,000 households are formed in a year in the UK.
Additional UK property investment is required, across multiple sectors, to ensure that the housing market is able to keep up with demand.
The rise of alternative asset classes
For those looking to profit from UK property investment, one option is to look beyond the traditional options available.
Alternative asset classes such as student accommodation, healthcare property, the private rented sector and hotels and hospitality have become mainstream in recent years.
According to Jones Lang LaSalle (JLL), investment in alternative assets could reach £20 billion by 2019.
Of the respondents of the JLL Alternative Property Survey 2014, 90% said that they were planning to expand into alternative property sectors over the next 1-5 years. The strong performance of these assets and an increased exposure to ‘less traditional’ opportunities has helped increase their acceptability among institutional investors.
It is clear that there is a high demand for new-build property across a range of sectors in the UK. From traditional housebuilding to student housing, development is required to ensure that the long-term stability of the housing sector.
It is not yet known how the rising cost of development and the adoption of a new Community Infrastructure Levy (CIL) will change the shape of the housing market. What is clear from the report’s findings is that there is a shortfall in housing supply across the UK.