Press Release Summary: The future of the UK property industry will, to some extent, depend upon the provision of new homes. Partly, of course, this will be a result of old homes needing to be replaced and new ones put in their place.
Press Release Body: The future of the UK property industry will, to some extent, depend upon the provision of new homes. Partly, of course, this will be a result of old homes needing to be replaced and new ones put in their place. But the supply of homes and its ability not only to meet demand at any given time but also adjust to future demographic requirements will be an
With trends such as smaller families, immigration, the flood of professionals to city centre apartments and the growth of buy-to-let, such developments have already had their effects on the property market and also the building industry, with the growth of apartment building in provincial cities being a prime example.
Yet such a trend is market-driven by high demand from people with above average disposable incomes, just as suburban development has been. It is also an area of major property investment as the buy-to-let market looks to rent out homes in sectors of the market with high demand to those who choose not to buy. Such market adjustments and niches react to the requirements of buyers and investors at any one time, not to long-term goals.
The latter, of course, is the concern of the government, with its aims to create more family homes, build in the geographical areas where the demand is highest and plan for long-term expansion to meet population projections running many years into the future.
Figures from the Royal Institution of Chartered Surveyors (Rics) may show just how at odds the short-term sensitivities of the market and long-term grand plans are. While Gordon Brown has set out an aim for three million new homes to be created by 2020, the recent slowdown in the market has, Rics has stated, made this target much less likely to be achieved. The latest research by the body has found that the majority of surveyors reporting a rise in demand for new homes over those reporting a decrease fell from 17 per cent in the third quarter of 2007 to 16 per cent in the fourth quarter.
With less demand comes less building, Rics commented. Senior economist David Stubbs concluded: \"Doubts are likely to intensify over the ability of the government to meet its ambitious house building targets. Indeed, it is worth noting that new housing starts have already begun to stagnate in recent quarters.\"
Mr Stubbs is not alone in this view. Tim Doherty, managing director at the National Self Build & Renovation Centre, said this week that the government had done plenty to encourage the building industry in the last year with measures such as relaxing planning controls. Yet, he added: \"However, already behind target, the likelihood of delivering enough suitable, affordable new homes over the next few years is diminishing,\" since the current situation meant that some house builders were \"practically on stop\".
Perhaps predictably enough, the suggestion that hopes for the 2020 building target being met are vanishing over the horizon attracted criticism of the government from political opponents, with shadow housing minister Grant Shapps telling the Daily Telegraph: \"It is becoming quite clear that the government doesn\'t have a cat in hell\'s chance of meeting its targets, either long or short-term.\" Whether the Conservatives can find a more successful plan is of course unknown as long as they are in opposition.
Of course, there could be good news for the buy-to-let industry in all this. The shortfall in supply could lead to a shortfall in demand later as the housing market recovers, perhaps after a few interest rate cuts. With a continued lack of affordable new homes, there will still be a large number of people looking to buy-to-let to fill the gap that the government, for all its ambitions, will not have been able to fill with brick and mortar.
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