Monday, Mar 12, 2007
What shortage?
Stock exchange: UK property shortage is an "urban myth"
"It is an urban myth that the UK has a shortage of property overall," he stated. "A shortage of affordable property has been caused for first-time buyers by the feverous speculation due to the increased money supply and loose lending criteria." Mr Holmes suggested that it is poor management of the UK's housing stock - where a number of rental properties remain unused and many homes are poorly maintained - that has caused this situation.
Posted by converted lurker @ 01:47 PM (155 views) Add Comment
12 Comments
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1. paul said...
Well lurker (AKA Mr Holmes), I would like to think this is the case. Immigration has replaced population growth temporarily, but there are not significantly more people in the UK now than there were 10 years ago. There are however a lot more flats and houses.
Housing shortage? That's what estate agents, sellers and even buyers tell themselves to justify high prices. There's little evidence that that's actually the case.
2. C'mon Correction said...
I'm seeing huge amounts of development going on in my area the most I've ever seen and I've lived here 25+ years. A lot of new builds are standing empty and can neither be sold or rented out. However, there does seem to be a lot more traffic at rush hour and there are more shops in the city centre and the pubs are busier than they used to be 10 years back, which may suggest an increase in popluation in this area or maybe just greater consumption?
3. denzil said...
The population has increased by 1.1 million in the five years prior to 2006. 2006 saw very heavy migration.
House building is estimated to be in the region of 140K for each of those 5 years.
Highly accurate stats on news builds on a year-by-year basis are hard to find but it is fairly easy to deduce that the population is increasing faster than new builds are being completed. It is also worth considering that there is a high number of illegal immigrants in the country who of course must live somewhere.
I'm sure there are many undesirable areas in the country that have lots of empty properties but I can count my area out of that equation regarding empty places. Supply is noticeable low but not as bad as pre-christmas but I know for fact of two cases of gazumping in the last fortnight.
The source for the above stats was the ONS but I also stumbled across an article on the BBC too which somebody may like to read:
http://news.bbc.co.uk/1/hi/business/6065330.stm
My feeling is that there has been a number of factors that have caused the HPI we have witnessed over the last few years including gullability and stupidity driven by sentiment. Sentiment could change things significantly but as yet I see just about nothing that will create a crash, stagnation yes, crash no!
4. dohousescrashinthewoods said...
Aren't there almost as many emigrants as immigrants (and they are the ones who actually can afford houses)?
5. Enuii said...
As I have said before, open your eyes and examine that new build block of apartments (sorry flats) you drive past every day. Look at the car park and how many have a light on in the evening, not many. The majority are empty, bought by speculators and even foreign investors who dare I say it are laundering money via the UK's lax regulation on such things. In Manchester and its surrounding areas there is chronic overbuilding of such property and many flats are sold as multiple units (typically 6 or more) to foreign buyers who leave them empty because no tenant = no hassle with the idea being to just sit on the property and sell it later. Legitamising the money is the main driver for these people not a profit as that has already been made!
6. enuii said...
As I have said before, open your eyes and examine that new build block of apartments (sorry flats) you drive past every day. Look at the car park and how many have a light on in the evening, not many. The majority are empty, bought by speculators and even foreign investors who dare I say it are laundering money via the UK's lax regulation on such things. In Manchester and its surrounding areas there is chronic overbuilding of such property and many flats are sold as multiple units (typically 6 or more) to foreign buyers who leave them empty because no tenant = no hassle with the idea being to just sit on the property and sell it later. Legitamising the money is the main driver for these people not a profit as that has already been made!
7. daopig said...
It doesn't surprise me that there may be enough housing stock in the country as a whole. Developed countries (yes we do enjoy that status) have low birth rates and only just replace themselves. OK, so there has been a great deal of inward migration, which has contributed to the incredible BTL boom and reduced the supply of affordable homes to new buyers. But the construction industry rolls on and retirees downsize and Australia and the United States do seem to be over burdened with ex-patriot British and if we take away the supply part of the equation then what has been driving prices up to their currently dizzy height is speculation and widely available credit.
It may be that home owners are going to have to put up with a continuous movement of house-prices in much the same way as a stock portfolio moves about. Perhaps extra dynamism in the market (that creates short-term buying and selling opportunity) is more likely than just prolonged boom followed by bust. Perhaps also, like shares we will see more differentiation based on asset location - the equivalent of share performance this time with respect to community services, schools, etc. An amusing thought.
8. Dave Lammi said...
There isn't any shortage of 1&2 bed flats in north Herts, and most of the towns that I visit around the country. The shortage seems to be 2&3 bedroom terrace houses. A flat is fine until you start a family and then it can be alittle restrictive. The problem is people are living with there parents longer because of cost and want to move straight into a house.
9. Mrryder said...
Denzil said "Sentiment could change things significantly but as yet I see just about nothing that will create a crash, stagnation yes, crash no!"
Have you been watching what's happening in the US? The bottom of the market is being pulled and it will happen here too. Buy to let crowd will head for the exits and prices will drop quickly is my prediction. Call it a crash if you like but I doubt it will be pretty whichever way.
10. bidin'matime said...
Denzil - 1.1 million people don't need 1.1 million houses - 140k properties pa over 5yrs amounts to 700k - I'm sure that a ratio of 1.5 people per property is not an over-estimate, so it would seem that housing has kept up with population growth. Of course, this ignores factors such as more single parents, etc., but this trend tends to ebb and flow - when the economy tightens, the old adage that two can live for the price of one will cause many to 'kiss and make up'...
11. denzil said...
bidin said:
>>Denzil - 1.1 million people don't need 1.1 million houses
I appreciate that and I would guess that your ratio of 1.5 per property is probably fair too. One thing that concerns me is that the article referred to in this blog states: "A shortage of affordable property has been caused for first-time buyers by the feverous speculation due to the increased money supply and loose lending criteria." Fair comment but the majority of new build's in the country seem to be BTL/FTB type property which implies that as the population grows there is not a sufficient balance of property types on the market (something this report refers to), which I would guess explains the shortages I see in my area.
FWIW enuii mentions above about large amounts of empty "new builds". I genuinely don't see that. I do see "To Let" signs on older flats up for a while but most new devs appear to be selling in days and then do appear to be occupied. I will look closer when I drive past.
Regardless though around my patch literally everything above first time buyer property is selling fast, every week I see a new sign pop up and several days later it is "Sale Agreed". Many Estate agents around me are advertising, "Properties Wanted". It is complete bloody madness and I am at a lot to explain.
12. bidin'matime said...
I live on the central south coast and 'quality' property locally is not moving quickly - my belief is that people flatter themselves by setting the price too high - a lot of places sit on the market for months, then seem to give up. I certainly wouldn't say they are moving quickly.
Estate agents will always be looking for properties to sell, whatever the market - it's no good trying to make a living out of a load of over-priced property - they need property that will sell, so if they cant sell what they've got they have to look for more.