123ArticleOnline Logo
Welcome to 123ArticleOnline.com!

ALL >> Investing---Finance >> View Article

What If No More Homes Were Built In The Uk?

By Author: Chris Westerman
Total Articles: 133

Home building is finally picking up after years of recession. A lack of adequate housing can otherwise have far-reaching effects.

The Wall Street Journal told its readers in 2013 that Americans are increasing their investment in UK rental housing. The reasons they cite for this phenomenon is because the number of people who own their own properties in the UK has fallen by 200,000 in just four years, evidence of the effects of recession and general difficulties in achieving financing (per data from the Office of National Statistics).

So why are American greenbacks flying east over the pond now? Home sales by the end of the year (2013) are expected to climb to about one million, thanks to the government’s involvement in loosening lending, found in Chancellor Osborne’s “Help to Buy” scheme. There also is, in simplest terms, huge pent-up demand for housing that reflects increasing population even while construction lagged woefully behind during the recession.

With a little bit of goosing from the Exchequer, the long-awaited solutions to the housing shortage may have been found. And yet, these rosier scenarios are still based on projections, not end-results. A third-dip recession could derail hopes and lead to a retraction.

If that were the case, what would be the outcome? What would happen if developers and homebuilders cut back construction and no new homes were built? A report issued by the UK Parliament, “What influences house prices and why do governments intervene?” (2009), considered the close interdependency of the housing sector and the economy. Relative to available housing inventory, it suggests the following:

• Home prices will rise – “Given the forecast demographic changes over the next twenty years, clearly if the housing stock does not increase alongside this, available housing will become scarcer and thus prices will rise.”

• Fewer single-person households – Up until 2009, there were 3.6 million singles who owned their one-person residences in England alone, roughly a quarter of all owner-occupied dwellings. And yet, with rising prices against single incomes, this allocation of singles may drop. As with their married-and-parenting siblings, a shortage of housing will force them to share homes or remain living with relatives.

• Government impetus to intervene – Depending on one’s economic policy philosophy, a shortage of affordable housing can trigger government intervention in the housing market; others may argue instead for laissez-faire approaches. Note that this point, written in 2009, portends the 2012 lending scheme now taking effect.

Fortunately, the developers and builders have adjusted to a different attitude about housing. Through years when ownership became inaccessible, more and more working families have become adjusted to renting instead of owning. The Office of National Statistics reports that since 2009, 3.8 million more people are living in rentals, a whopping 23 per cent increase. In the first quarter of 2013, rents increased by an average of 2.4 per cent, with the national average monthly rate at £835. Just how long these renters wish to stay that way – if they plan to become owners at all – remains to be seen.

There is no edict against building new homes, fortunately, and the current uptick in building suggests a corner has been turned. Land investors are identifying specific areas where demand is greatest, which they turn into new developments that are fetching market-rate prices. Helping prompt this is the bifurcation of investment and risk between site developers and homebuilders, with the former making strategic land buys and site preparation before reselling the land to the latter, who construct homes that meet product and price expectations.

Individuals who choose to invest in real assets such as land and housing development should consult a qualified personal financial advisor. As with any investment, the risk profile of real estate needs to fit with the investor’s overall financial strategies.

Total Views: 76Word Count: 623See All articles From Author

Investing / Finance Articles

1. Why Invoice Invoice Factoring Financing Is Better Than Bank Overdraft Credit?
Author: Stephen Perl

2. Apoyos Para Negocios En 2017
Author: Martin

3. How Do You Master Mind Your Long Term Loans Without Collateral?
Author: Jenny Elmore

4. Algotrade Helps You Make Consistent Profits In Forex Market
Author: johnsyanol

5. The Guide To Choosing The Best Stock Trading Advisory Service
Author: Dharmesh Patel

6. What Should An Executor Of A Will Do To Get Grant Of Probate?
Author: Probate a Will

7. Trade12 Provides A Perfect Educational Experience For New Traders!
Author: Trade12

8. Home Loan Rate Comparison – Why Is It Important?
Author: Kimberly Ash

9. The Benefits Of Getting A Reliable Mortgage Broker Harrogate
Author: Brian Miller

10. All You Need To Know About Co – Signing A Loan
Author: Neha Sharma

11. What Are The Insurance Policies To Opt For In Your Early 30's?
Author: Neha Sharma

12. Multi – Currency Card: How To Pay Less For Foreign Currency
Author: Neha Sharma

13. Debit Card: Teach Your Children To Be Financially Smart With These Tips
Author: Neha Sharma

14. How To Save Up For A Financial Goal With The Recurring Deposit Calculator
Author: Neha Sharma

15. Step Up Your Investment Savings With A Recurring Deposit
Author: Neha Sharma

Login To Account
Login Email:
Forgot Password?
New User?
Sign Up Newsletter
Email Address: