With rising UK house prices, Experience Invest takes a look whether UK Housebuilding could ease the housing crisis.
UK housebuilding, property prices, Brexit and the rising cost of renting have been making the headlines. This handy infographic breaks down the numbers behind the headlines.
Rising UK house prices leads to homeownership slump
With average UK house prices rising five times faster than wages over the last five years, it’s no surprise that homeownership levels have slumped.
Data released by thinktank Resolution Foundation has shown that homeownership has dropped to its lowest level in 30 years.
As UK housebuilding fails to keep up with demand, many people have been forced into rental accommodation.
9 out of 10 renters do not have enough money for the deposit needed to buy a property and, with UK house prices on the rise, Local Government Association believes that 4 million people will no longer be able to afford somewhere decent to live by 2024.
The average price of renting has reached £792 across England and Wales however, according to the experts at Portico, average rents in London dropped slightly by 1.7% from May to July.
High demand for UK housebuilding
The Yorkshire Building Society recently report that UK housebuilding targets have be missed by 1,199,180 since 2004.
Despite the government’s pledge to build 1 million new homes by 2020, with an average of 200,000 per year, it is thought that just 142,890 homes were built in 2015.
There is little confidence that the government will keep to its UK housebuilding targets. Only one in ten people believe that the government will to meet its Starter Home target under current market conditions.
A recent report from the House of Lords Economic Affairs Committee echoed these concerns. The report estimates that the government must build 300,000 homes each year in England to help solve the housing crisis.
What changed in 2016?
It is safe to say that even with steps in place to build more homes, there is a fundamental undersupply of housing in the UK.
In the run up to the 3% buy-to-let and second home Stamp Duty surcharge that came into effect in April 2016, UK house prices reached record highs.
Despite the introduction of higher Stamp Duty rates on investment property, it has done little to kurb buyer sentiment.
The result of the EU Referendum in June means the UK will take steps to leave EU. In the wake of the result, the pound reached a 31-year low.
The weaker value pound has attracted overseas investors who have taken advantage of the market’s favourable exchange rate.
The Bank of England’s decision to cut interest rates to new record low of 0.25% could potentially boost the interest of domicile buyers who have held off buying property since the outcome of the vote was announced.
Rising demand from overseas investors coupled with a potential rise in the amount of UK buyers will add extra pressure to the market.
Alternative assets have also caught the eye of investors who wish to diversify their portfolio.
The Knight Frank, The Core Market Report 2015 has shown that 77.8% people plan to increase their exposure in the specialist property sector in the next 1-2 years.
Specialist property such as student property, healthcare and hotels have emerged as targets for investors.
Tell us what you think of our UK Housebuilding in Numbers Infographic in the comment box below or join the conversation using the social buttons below.