UK housing crisis
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The UK is facing a significant housing crisis as demand for homes continues to outstrip supply. Housing prices are predicted to increase 50% over the next decade due to lack of new construction. There is currently a shortage of over 1 million homes. Several UK cities like Birmingham are facing shortfalls of tens of thousands of homes as populations grow rapidly. A long-term strategy is needed to increase housing supply through partnerships between investors, developers, and local governments to address land acquisition and new construction.
UK housing crisis
- 1. UK SUPPLY AND DEMAND UK housing crisis
- 2. Introduction This presentation is a taste of the housing crisis that the UK is facing. Prices of homes across the UK are predicted to jump by 50% in the next 10 years as a shortage in housing supply continues to push up prices, according to a report by the Centre for Economics and Business Research (CEBR).. Housing campaign groups warn that with 1.4 million households on council waiting lists – a 34% rise since 1997 and 85,000 children living in temporary accommodation – equivalent to more than the entire population of the Hertfordshire town of Stevenage, the government now has to put pressure on builders to meet affordable housing targets. There is currently a 76pc shortfall in rural housing, which is forcing people to move out of country towns, and is driving up house prices to unaffordable levels. The call came as new figures showed that UK house prices grew at their fastest pace in eight months this December, and amid warnings that a shortfall of new homes could push the growth in prices
- 3. Introduction 0 50 100 150 200 250 300 350 400 1970 1972 1975 1980 1990 2010 AxisTitle UK housing decline picture developing over decades UK housing decline picture developing over decades
- 4. Introduction The number of housing completions in the UK has fallen from 378,000 in 1969-70 to 141,000 in 2013-14, according to the Department for Communities and Local Government. The number of housing completions has fallen behind population growth. In simple terms, supply is not meeting demand. This mean’s a opportunity exists to optimize ? The Confederation of British Industry (CBI) believes Britain needs to build 240,000 houses a year to keep up with population growth. In some parts of the country, we're building half that.
- 5. Valuations The average London salary in 2013 was £30,479, according to the ONS. Compare that with the average London house price of £428,000. Prices continue to rise. The latest house price data show the cost of a home in the capital rose to a staggering £514,000 in July, taking the average price above the 4pc stamp duty threshold. This is good news for investors, buy sit and wait for valuations to enhance. A chronic shortage of properties continues to drive house prices upwards across Britain. High quality global journalism requires investment. Please share this article with others using the link below, do not cut & paste the article. See our Simon Rubinson, chief economist at Rics, said lack of supply was the core issue for the market. “The legacy of the drop in new build following the onset of the global financial crisis is now really hitting home, with both the sales and letting markets continuing to show demand outstripping supply,” he said. High quality global journalism requires investment. Please share this article with others using the link below, do not cut & paste the article. See our Annual pace of house price growth across England and Wales climbed to 5.2 per cent — the fastest rate of increase seen on that index since April, with the average property jumping £2,500 in October.
- 6. UK Government Plans / Solutions The Conservative chancellor said inhis Autumn Statement for 2015 that he will double the house building budget to £2bn ($3bn) and help to get 400,000 new affordable homes under way by 2020. I say under way, because the specific term the Treasury uses is not housing completions, but housing "starts". While Developer’s are getting ready to put down the foundations – Osborne will make credit even cheaper for homebuyers in London, who face, according to the Office for National Statistics (ONS), an average property price of £531,000. The average for England is £299,000. Under his new London Help to Buy Scheme, an extension of the existing cheap credit funnel, Londoners with a 5% deposit will get an interest free loan worth up to 40% of the property's value. This will make it easier to buy a home, but does not get more built and London needs more built.
- 7. Investor & Local Government partnership Part of implementation strategy has to at some degree have a connection with central government departments, national agencies and local authorities to develop specialist support for a wider range of infrastructure housing programmes. I believe it would be vital and help make it smooth in our operation of business if we developed relationship’s with core community leaderships. The add on effect would be targeting the roots and enhancing our image as a caring friendly partner in helping solve the local housing issue’s in their area’s. Portraying a good image is extremely important in achieving not only our goals but also meeting our ethical and corporate social responsibility.
- 8. Mechanics Dazzling wealth of investors from Russia, China and the Middle East, are already backing UK property developers in pursuit of their share of the housing crisis cake. Developers have bounced back from the crash with bigger plans than ever before, acquiring vast areas of land with the ambition to operate like the great estates of yore. Terminology of the UK is to privatize, lets get the investment coming in and investors to reap rewards as long as solve our problems. This is good news for all, foreign investor’s acquire, develop, add value and enhance valuations. This is a serious opportunity that entails in depth due diligence in acquiring the correct locations, land, costing of developing and the right attraction to lure buyers. Luckily there isn’t much of concern in finding buyer’s. the demand is plenty.
- 9. Property Developers Britain’s ten biggest house builders will this year make profits of more than £2bn for the first time since the high water-mark of the last credit- fuelled property boom. The surge in profits comes despite the number of affordable homes built in England falling to an eight- year low. Bureau of Investigative Journalism shows that the country’s biggest builders, who between them control enough land to create 480,000 homes, made pre-tax profits of over £2.1bn in 2014 – a 34% jump on last year. At a time when the country faces a housing crisis and with homelessness having risen significantly in recent years, we desperately need developers to provide more affordable homes,” said Jon Sparkes, chief executive of homeless campaign group, Crisis.
- 10. Demand & Gap. Cities across the UK 0 40000 80000 120000 East Midlands East England London North East South East South West West Midlands Yorkshire & Humber 9 Estimated Annual Demand Gap
- 11. Demand This is not simply a London story – the shortage of supply of new homes is creating pressure across the country, the chart above clearly illustrated by breaking down demand across the country, it shows the difference between annual demand and completions of new homes is unsurprisingly most acute in London and the South East; but the picture is far from rosy in many other areas. The East of England, the Midlands and Yorkshire and Humber also show significant gaps between demand and supply By 2027, our population is set to reach 70 million – we need to make sure everyone has a décent roof over their head The rapid rate of new household formation (additional individuals, couples and families needing a home for reasons like marriage breakdown or moving out of the family home) helps to illustrate the scale of the gap between demand and supply. Figures for 2013 put the number of households in the UK at 26.4 million: if these projections play out as suggested, we will see an extra 2.7 million new households by 2021. That’s an extra 337,500 new households looking to put a roof over their heads every year.
- 12. Example / Birmingham Birmingham's housing shortfall has been underestimated by 5,000 – despite plans to build in the green belt - new documents reveal. Spiralling demand for new housing has seen the city's overall requirement rise to 89,000, compared to the 84,000 predicted. However, the city can only find space to build 51,100 - meaning the shortfall is creeping close to 38,000. Rising demand comes as the city's population is expected to soar by 150,000 - equivalent to the population of Oxford - over next 16 years. Birmingham City Council's director of planning and regeneration, Waheed Nazir, said co-operation across the West Midlands was vital to addressing the issue. He said: "Clearly, Birmingham can't meet its housing requirement and as a consequence we are going to have to work together closely, moving forward. "Combined authority or no combined authority, there is already a duty to co- operate. We have to work together as neighbours. But a combined authority would bring greater cohesion to the issue of dealing with the housing requirements of the region.
- 13. Land Mark Hayward, managing director of NAEA, says: ‘We’ve been banging the drum about the dwindling supply of housing for a while. There simply aren’t enough houses to match demand and we’re reaching crisis point.’ Local councils have been ordered to draw up plans that set out how many new houses are needed in their area and identify possible sites for building. They must work with neighbouring areas that may not have as much space to help plug the gap. And the biggest rows of all are around major cities, where there are jobs and where the nearest available space tends to be green belt land. But due to extreme pressure’s of the crisis the Government is showing flexibility in targeting green belt area’s. This is good news for developer’s.
- 14. Strategy I believe in the interim the short strategy for the implementation of action of plan should be to forming connections with the UK government and the Local Bodies, property developers, land owners, and finally the real estate agent’s to advertise and execute sale’s. I do not believe it would be viable to acquire land in or near london although the highest demand for housing is based n this location. It would be more cost efficient to consider cities such as Birmingham, Manchester and other wider growth area’s.
- 15. Strategy Yes I totally would recommend a more comprehensive strategy based on in depth research and due diligence for a strong foundation to build for long sustainable growth plans. I believe this is a huge giant of a opportunity to optimize and poses a great challenge with fantastic rewards. These are just a few base points I have touched to show you the picture. Sajed Hussain