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UK house prices rocket upward in light of 1 million home shortfall
March 28, 2014Article by Ray Withers
UK house prices increased by an impressive 6.8% in January 2014 compared with a year previously, the latest data from the Office for National Statistics (ONS) has revealed. The increase has put the average UK house price at £254,000, according to the ONS report.
The hardest hit
First time buyers were some of the hardest hit by the impact of the UK’s blossoming property market. On average they paid 7.6% more for property in January 2014 than they did in January 2013. The increase in prices has seen many would-be first time buyers priced out of the market and forced to join the country’s massively expanding private rented sector.
1 million homes needed
One of the drivers behind the rising prices is the UK’s chronic shortage of housing. The country simply isn’t building homes fast enough to meet demand and the situation is worsening every year. March’s budget announcement incorporated the government’s aim to build an additional 200,000 homes by 2020, but the latest report from the Home Builders Federation has revealed that the UK has been building at such a slow rate over the past decade that the currently housing shortfall has reached 1 million homes.
The Barker Review of Housing Supply, conducted ten years ago, reported that 210,000 homes per year needed to be built to avoid a housing crisis in the UK. Since then, the country has built an average of 115,000 homes per year, hence the current shortfall. In order to sufficiently meet the population’s requirements, Susan Emmett, director of residential research at Savills estate agency, estimates that,
“We should be building 240,000 new homes a year.”
The rise of under-occupation
An alternative perspective to the housing crisis would be to address the current rate of under-occupation in the UK. Under-occupation is defined as a single person or couple who reside in a property with three or more bedrooms. Clearly, much-needed housing space is being wasted in such instances, which Stephanie McMahon, head of research at Strutt & Parker, reports now applies to an incredible 47% of households across England and Wales.
Yet addressing the rise of under-occupation is unlikely, as Ray Withers, Chief Executive of award-winning developer Property Frontiers, explains,
“Many under-occupied households are the result of families where the children have grown up and left home, leaving the aging parents rattling around in a house that is larger than their needs warrant. However, the idea of turfing these individuals out of the family homes they have occupied for decades seems an unlikely solution to the UK’s housing problems. Instead, the country needs to focus on building high quality, affordable homes to meet the needs of both buyers and those who wish to rent.
“The UK’s housing market has seen a solid start to 2014 and the outlook is certainly sunny for the years ahead. The Office for Budget Responsibility has just revised its five year property market forecast to reflect projected growth of 30.8% for UK house prices. Clearly now is a great time to invest in the sector.”
A slice of the action
Many of those wishing to invest are being attracted to the private rented sector. High-yielding new-build developments, such as those offered by Property Frontiers in leading UK cities, both help to address the UK’s housing crisis and meet the huge demand for high-end rented accommodation.
From prime city centre apartments in Birmingham starting at £95,000, with realistic yields of 9% and developer underwriting available, to luxury waterfront apartments in Liverpool from just £82,500 with 8.5% gross yield guaranteed in year one, Property Frontiers is at the forefront of the UK housing market.
Investors wishing to take advantage of such high-yielding buy-to-let opportunities and the associated potential for capital gains are invited to contact Property Frontiers or call +44 1865 202 700 for further details.