Posts with tag: housing crisis

Land is the Key to Affordable Homes

Published On: June 9, 2015 at 4:54 pm

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Land is the key to building affordable homes, explains housing market expert Neal Hudson in research for Savills.

He says: “Land is the fundamental ingredient in the construction of new homes. Many of the issues limiting the rate of new home building can be traced back to the pricing and availability of land for residential development.”1

The current housing crisis stems from land being very expensive. This makes it hard for developers to build genuinely affordable homes. More land needs to be made available in areas that

Land is the Key to Affordable Homes

Land is the Key to Affordable Homes

people want to live in, such as the South East.

A study in the Financial Times states: “House building does not drive down prices.”1

But it is more so the way that homes are built that is the problem. The business model used for building homes means that the country cannot produce affordable properties even if more land is made available.

Developers buy land competitively years before they begin building. They pay the highest price possible to outbid rivals and therefore charge premium prices for the homes that have been built at the lowest possible cost. Homes are consequently smaller and lower quality.

Additionally, developers only build and release new homes onto the market at a rate that does not affect maximum sales price. Commonly, they sell one home a week per office to avoid discounting the price. This means that the Financial Times is right – the business model is designed to maintain prices, not bring them down.

This is hardly the developers’ fault; they are simply adopting the best strategy for business in a broken housing market. If any developer did something different, they would go out of business.

But other Northern European countries build faster, creating more affordable and larger homes. Active land planning is used to bring land to the market at reasonable prices. These policies allow multiple developers to build better.

The Netherlands positions a plot of land on a city boundary and specifies what can be built there to multiple builders. The land price is then frozen and all prospective developers are aware of the cost.

This changes the competition from bidding on land to building the best quality homes that will sell to customers. The market is not failing in these countries, but is more for homes, not land.

In Germany and Holland there is a prosperous house building industry that provides some of the top quality new homes in the world.

If the UK’s house building is to be reformed, it should be based on two basic principles:

  • Policies are needed for making more land available for homes in the right locations.
  • Policies are required for changing the broken development model to allow faster, higher quality building.

 

 

British Adults Prefer Conventionally-Designed Homes

Published On: June 8, 2015 at 11:58 am

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Over four to one Britons support the building of new homes on brownfield land in their local area, but the design of these properties highlighted contrasting preference.

The research was conducted by Ipsos MORI for Create Streets, a social enterprise encouraging more urban homes in conventional, terraced streets rather than complex multi-storey buildings.

The survey, undertaken last month, asked 1,000 British adults if they support the building of new homes on local brownfield land. 64% said they either strongly or tend to support this, with

British Adults Prefer Conventionally-Designed Homes

British Adults Prefer Conventionally-Designed Homes

14% opposing.

Respondents were then shown five photographs of different housing types and asked if they would support or oppose the building of ten similar style homes in their local area. Some properties, especially those in the most conventional form with conservative style and building materials, gained strong support. Others were less popular.

The study also revealed differences in tastes. Those living in London and renters prefer less traditional developments. However, these do not gain as much support from older age groups and owner-occupiers.

Director of Create Streets, Nicholas Boys Smith, says: “The poll shows that a strong majority of the British public like the type of conventional home that a child would draw, but which too many in the design and planning establishment condemn.

“The findings also demonstrate that design does matter in winning support for new buildings. There is over three times as much support for popular homes as for the least popular. And half of those who oppose new building in principle change their mind when presented with the most popular option.

“The question is not: How do we build more homes? But: How do we make new homes more popular?”1

Research Director at Ipsos MORI, Ben Marshall, comments: “This survey adds to consistent evidence, which shows that design matters. When it comes to addressing Britain’s housing supply shortage in the years ahead, what? is more important as well as, how many?

“New builds have something of an image problem, but the evidence here is that this doesn’t have to be the case. And while there is likely to be a more acceptable face of new housing supply, we should also recognise that opinions vary geographically and demographically.”1 

1 http://www.24dash.com/news/housing/2015-06-08-Poll-shows-preference-for-conventionally-designed-homes-that-a-child-would-draw

One-Bedroom Home Goes on Market for £3.75m

Published On: June 8, 2015 at 9:56 am

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On a quiet street in Knightsbridge is Tutti Frutti, the one-bedroom property with a huge price tag.

Londoners will be quite aware that you don’t get much for your money in the capital, but this house takes the crisis to another level, as it has gone onto the market for a huge £3.75m.

The extravagant home could be the world’s most expensive one-bedroom house due to its massive asking price.

Described as an “exquisite bijou mews house”1, the property was designed by interior decorator Federica Palacios. The walls and floor of the garage are purple and the kitchen has been painted in bright stripes.

Over three floors, the home surprisingly boasts a double garage, utility room, reception room and shower room. However, it does have just the one bedroom, which is unconventional for any house.

At £3.75m, the property is around ten times more expensive than the average home in London and just half the price of Wentworth Woodhouse stately home, which is 150 times bigger.

The 1,200 square foot home was put on the market by Jeremy Davidson Property Consultants and is being sold with the furnishings and fittings. It is a short walk from Harrods and Hyde Park.

Property expert Henry Pryor says that Tutti Frutti would be a perfect home for pop star Prince or the ideal headquarters for portal Zoopla.

Pryor continues: “Either would surely be delighted to find themselves in this violet Knightsbridge den. It is in one of the most fashionable parts of London, close to the best shops, the coolest restaurants and would surely make some trustafarian daughter very happy.

“Most people would opt for two years at the Savoy Hotel, which the Stamp Duty alone would pay for. But no doubt there is someone with the decorating taste of Peter Stringfellow who will fall in love with the location and the style.”1

1 http://www.mirror.co.uk/news/uk-news/see-worlds-most-expensive-one-bedroom-5803850

Homes for sale at lowest rate for years

Published On: June 4, 2015 at 12:36 pm

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A report from the Halifax has indicated that the number of properties for sale on the market is at its lowest level for a number of years.

The chronic shortage of homes for sale, married with surging demand from buyers, has seen prices soar at a greater rate than wages. Property prices increased by 8.6% in the year to May, meaning the average cost of a home is now £196,067.

However, prices did slow in May, albeit by 0.1%, in comparison to April.

Imbalance

Housing economist at the Halifax, Martin Ellis, suggested that, ‘the imbalance between supply and demand is likely to continue to push up house prices over the coming months. Looking further ahead, the increasingly level of house prices in relation to earnings is expected to dampen house price growth.’[1]

Homes for sale at lowest rate for years

Homes for sale at lowest rate for years

Jonathan Samuels, chief executive of Dragonfly Property Finance, agreed with Mr Ellis’ comments. Samuels stated that, ‘unless supply improves materially, it is hard to see how prices will not continue to rise throughout 2015, albeit at a more modern pace relative to last year.’[1]

These figures from the Halifax come hot on the heels of data released yesterday from the Nationwide, which indicated that 38% of properties were sold to cash purchasers during the first quarter of 2015.

[1] http://www.bbc.co.uk/news/business-33003592

 

 

Last Time Buyer Market Reaches £820 Billion in Value

Published On: June 4, 2015 at 11:26 am

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The UK’s last time buyer market has reached a total of £820 billion in value, found research from Cebr, the economics consultancy and Legal & General.

Last Time Buyer Market Reaches £820 Billion in Value

Last Time Buyer Market Reaches £820 Billion in Value

This sector, of those buying their last home, also has 5.3m under-occupied properties. Within these homes, there are a total of 7.7m spare bedrooms.

The wealth of this market is expected to hit £1.2 trillion by 2020.

Director at Legal & General, Stephen Smith, says: “We currently have a housing crisis in the UK and there is a chronic shortage of appropriate properties to meet this huge demand. Government policy is focused on schemes to build more homes for first time buyers and to help people get onto the property ladder. Initiatives like Help to Buy, which encourage the building of more homes, are always very welcome.

“However, at present, the last time buyer market is being hugely overlooked and as our figures show it could help to solve the UK housing crisis.

“We need to make it easier for older people to even consider moving by relieving the onerous burden of Stamp Duty, creating better options for equity release and providing real alternatives for older people in terms of the types of home that they can live in and the infrastructure that surrounds them.

“If we are able to get that right we will help older people in the UK move to homes which better fit their lifestyles and their needs and at the same time unlock large swathes of valuable housing stock for growing families.”1 

1 http://www.propertyreporter.co.uk/property/uks-last-time-buyer-market-swells-to-820bn.html

Should Britain follow Berlin’s rent-capping?

Published On: June 4, 2015 at 10:38 am

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A new law introduced in Berlin has lead many industry experts to suggest that Britain should follow suit.

The German capital has become the first city in the country to introduce a rent cap on its inner-city properties. As a result, landlords are prohibited from charging new tenants any more than 10% of the local average.

By introducing the new law, it is hoped that Berlin’s rents will begin to slow as at present, they are among the fastest rising in all of Europe. Many industry peers have questioned whether a rental cap could be the answer to Britain’s housing crisis.

Rises

Around 50% of the population in Germany rents their home. However, Berlin in particular has experienced a stark rise in rental prices. During an eight-year spell between 2003-2011, property prices in the German capital rose by 40%, with rents increasing by more than 9% between 2013 and 2014 alone.[1]

Other major German states are now considering the introduction of their own rental caps for their major cities.

Should Britain follow Berlin's rent-capping?

Should Britain follow Berlin’s rent-capping?

Reiner Wild, managing director of the Berlin Tenants’ Association, said that it was right to act now to ensure that Berlin didn’t experience the same problems as other major European cities. Wild said that, ‘the rent ceiling is very important for Berlin because the difference between the rent paid in existing contracts and new contracts is so high.’ He went on to suggest that, ‘the other problem is that we have 40,000 more inhabitants per year. Because of this situation the housing market is very strong.’[1]

‘We don’t want a situation like in London or Paris,’ Wild continued, before adding that, ‘the reality in Paris or London is that people with low income have to live in the further-out districts of the city.’[1]

[1] http://www.telegraph.co.uk/finance/property/news/11645625/berlin-rent-control-law-housing-crisis.html