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There is a huge demand for more residential property in the UK. London mayor, Boris Johnson said there needed to be a further 400,000 homes built in London alone. The current lack of suitable and affordable housing means that small property bubbles have occurred, like in London, putting prices well out of reach of the average London resident and worker and meaning the property market is fuelled by foreign investors. Across the UK, it is estimated around 200,000 new homes need to be built each year to keep up with demand. In recent years only around 100,000 have been completed. More housing would ensure that the UK's housing market was kept stable and the market would be more based on income and inflation, not a speculative and volatile housing price index. Large estate agency Savills estimates that there needs to be well over £200 billion spend on new housing in the next five years and this is just to meet demand in the rental section. The UK Government has introduced various schemes to try and kick start the housing building industry and get people buying and moving again. For example there is the Property Authorised Investment Fund, beneficial tax structures for house builders and changes to Stamp Duty Land Tax a couple of years ago, with price bands for stamp duty being moved. There will also be a further £10 billion applied to a loan guaranteed scheme to try and increase the number of houses for the private rental sector. There are also the schemes like First Buy and Equity share schemes aimed to get more first time buyers back into the market. However, this alone will have little effect on the housing market. Even if the full amount set aside for the First Buy scheme was utilised and there was over 17.5 billion pounds of new house purchases done through the scheme, it would still only been 74,000 new houses in the time the scheme is due to run for. Much lower than the 240,000 new houses needed each year. However for the three years the scheme has been running, not even half the funds allocated have been used. There needs to be an asserted effort to attract institutional investors to the market, whether from overseas or UK financial institutions. More needs to be done to encourage UK pension schemes to invest in the housing market. An increase in construction will help reduce prices as the supply and demand equation becomes more balanced, will create more jobs and generally boost the economy. For more property market news visit WhatHouse? property portal.
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