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UK population boom puts pressure on housing sector as homebuilders race to keep up

November 20, 2014Article by Ray Withers

The UK’s population has grown faster than that of any other European country for the past decade, according to ONS data. Mass immigration has led to the UK becoming the second most populous country in Europe, with only Germany counting more inhabitants.

While immigrants have brought with them a huge range of skills from which Britain has benefitted, they have also put pressure on the UK’s housing system. Back in 2004, the Barker Review of Housing Supply found (amongst other things) that the UK had experienced an upward trend in real house prices of 2.4% over the previous 30 years. In order to reduce this rate to that of the EU average (1.1%), economist Kate Barker recommended that an additional 120,000 houses per year could be required.

Since Barker’s review, not only have the UK’s homebuilding efforts failed to stick to this level, but the country’s population has increased dramatically, leading to a heightened level of demand for available housing stock and intense pressure for newly built developments.

At the same time, the recession that began in 2008 impacted negatively on homebuilding levels, with housing starts dropping rapidly to less that half the level that they were at when the hard economic times struck, according to the latest Department for Communities and Local Government Housing Statistical Release (June Quarter 2014, England).

With the private rented sector predicted by Savills to account for 24% of all households by 2019, demand for high quality, new accommodation is experiencing a sustained peak. It’s a peak that experts agree is unlikely to go away anytime soon. The UK remains a popular destination for migrants from overseas and, while it does, the property sector will continue to feel increasingly under pressure, with supply lagging far behind demand. The head of Labour’s commission on how to increase homebuilding, Sir Michael Lyons, believes that 200,000 new homes need to be built per year by 2020.

New developments need to be efficient, cost effective and desirable if they are to fit the bill. The UK’s first eco town, under construction in North West Bicester, Oxfordshire, exemplifies thinking in this area. The development will bring 6,000 sustainable new homes to Bicester and has been named the Exemplar, while other towns watch with fascination to see how the new zero carbon community will pan out.

Looking further into the future than Savills, the Joseph Rowntree Foundation’s projections for the UK’s housing market make for fascinating reading. The ‘What will the housing market look like in 2040?’ report projects that rents will rise twice as fast as incomes by 2040 and that the private rented sector will continue to grow while home ownership and social renting decline.

Hotspot areas such as Bicester, Oxford and Belfast are of particular interest to those looking at the UK’s property market from an investment perspective. Rising demand and lack of supply in such areas are contributing to the kind of price rises and strong yields that get investors’ blood pumping and it’s a situation that looks set to continue well into the next decade.

As someone who has been involved in the UK property market for many years now, it’s fascinating to watch this story unfolding and see how the country responds to the current inability to supply housing fast enough to meet demand. It’s also fantastic from a personal accomplishment point of view to be part of that story and to know that Property Frontiers is doing its bit to help the UK build high quality homes for its rapidly expanding population.

To find out more about leading UK buy-to-let investment opportunities, contact Property Frontiers or call +44 1865 202 700.


Ray Withers

Ray has over 17 years’ experience in the international property market and bought his own first international property investment back in 2002. Aside from running Property Frontiers, Ray has been involved in residential, hotel, student and commercial property investment and development in both the UK and overseas and co-wrote "Where to Buy Property Abroad - An Investor's Guide". As Founder and Trustee of the Frontiers Foundation, Ray is directly involved with many of its projects to ensure they have a direct and tangible impact in individual communities across the globe. He is passionate about property, travelling, scouting out new opportunities and finding time to spend with his young family.
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