It has been an interesting week and on Wednesday night we hosted a dinner with Richard Parker, who advises Government policies on housing and was part of the Lyons Commission. It was very insightful but also highlighted there is no clear party in the election when it comes to housing.
It did not surprise me lately to learn
that growth in home ownership was stalling in the largest English cities as
lets be honest the market is starting to price people out. Now this doesn’t
apply to London but it is becoming a wide scale problem and its clearly on the
radar of politicians with a number of manifestos outlining options to address
the “housing crisis” through Right to buy
or Use it or Lose it
The study performed by the National
Housing Federation shows that in core cities (Birmingham, Bristol, Leeds,
Liverpool, Manchester, Newcastle, Nottingham and Sheffield) only 52% of people
are home owners compared to 63% nationally. Interestingly though if you compare
that to overseas, say Germany or Switzerland, it’s positively high given the
European rental models.
So when we say a housing crisis what do
we mean? I bought my first house on a four times salary mortgage – fairly
stretched but we made it work. In Bristol, the average house price is nine
times the average salary in the area; somehow I doubt a bank will stretch that
far! And this replicates across other cities. This is simply driving people to
short term lettings in a hope of saving cash for a deposit or longer term
privately rent accommodation – either way it fuels the lettings market, which
in turn drives up prices.
How do you address this issue in cities? Well there is no one size fits
all but a lot of these cities are in need of regeneration with houses in
central parts lying vacant. There is also infrastructure improvement needed
which makes the commute that bit easier – this gives you more choice for that
house and reduces the “demand” part of the equation.
The next key step will be found out on 8 May 2015 – all parties have
slightly different approaches to address the housing situation, they all will
in their own way help but everyone needs to get behind them.
But while the regions battle, London
ploughs on. In a recent survey it was found that there were 264 on going towers
being constructed in London (a rise of 10% on the prior year) and further than
that certain housing associations are becoming self-sufficient and delivering
on their housing commitments. It is going all too well for them.
The interesting point of the survey was
that 80% of these towers were residential, which if you think about the
regions, is a different way of life – I do wonder how many of these “houses”
are second homes for those working in the city. It is needed though with the
rising population of London either way – it’s a two pronged attack of
population growth and commuter growth.
But it’s not just London on the up. In
2014 the European property market could only be described as a good one with
2015 shaping up the same. In total £156bn of investment was ploughed into
Europe with hotels and industrial benefiting the most.
But why? It comes down to liquidity.
Liquidity is an issue for investors and people are therefore putting money into
safe havens (like London above). The global low interest rates means real
estate is attractive to increase returns,
Enjoy
the weekend
Lee
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