Is the Future of New Home Construction Looking Healthy?
3 minute read
Finally, there’s good news for families, first-time buyers and those who are desperately stuck in the renting trap, as the proportion of houses being built reaches its highest level since 2001. The lack of available and affordable housing has been blamed for the property price rises and the record high rental prices in the UK, but hopefully a higher level of supply will soon bring some respite for renters and buyers. Despite the government’s protestations that the booming buy-to-let market was responsible for the dearth of available housing supply in the UK, the truth is that not nearly enough new houses have been built for years. Estimates put the need for additional housing in England at between 232,000 and 300,000 units a year – levels which have not been reached since the 1970s.
A Construction Boom
Government figures show that the number of new homes under construction in the three months to June was 36,400, representing a two percent rise on the previous three months, and a 6% jump on the same period last year. In the year to June, the construction of a total of 144,280 new homes had been started, representing a 2% rise on the figures to June 2015. During the same period, completions totalled 139,030, which is up 6% on figures for last year. In response to this surge in supply, data from the Council of Mortgage Lenders shows there were 72,800 first-time buyers in England in the second quarter of 2016, more than there have been at any time since 2007.
Is Supply Finally Catching up with Demand?
The number of new households each year has exceeded the number of homes built in every year since 2008. During the financial crisis, house building dropped sharply and has only recently started to recover. The number of new house builds for the second quarter of 2016 is 112% above figures for the same time in 2009. However, it is still 26% below the 2007 peak. The house price inflation in areas of high demand has led some commentators to suggest that if the trend continued, home ownership could be an ‘impossible dream’ by 2020 for those not already on the housing ladder. However, this increase in the construction of new homes has brought new hope to first-time buyers, who have also been buoyed by news from Rightmove that the asking price for UK properties fell by an average of 0.9 percent in July. Central London was particularly badly hit, with asking prices falling by 2.3% for the month.
Is Now the Time to Buy?
With construction of new homes on the rise and property prices falling across the UK, it’s little wonder there are now more first-time buyers than at any time since 2007. If you’re looking to capitalise on current market conditions, get in touch with our team to discuss your mortgage options today.