The UK housing market is under pressure. With prices going up fast and demand hugely outstripping supply, first time buyers are finding it more difficult than ever to get a foot on the housing ladder.
In London and the South East, the problem is even more severe, with all of the ten least affordable postcodes located in the capital. The only way to ease the housing crisis is to build new homes. The more properties there are on the market, the slower prices will rise and the more choice there will be available to first time buyers.
House prices have risen so steeply in the last few years that many young people in the UK have given up hope of ever owning a home of their own. The Government recently came in for criticism when it expanded the definition of affordable housing to include properties worth up to £450,000, 17 times the national average wage.
If prices stay as they are, Homeless charity Shelter estimates that ‘affordable houses’ will be out of reach to 98% of low income Brits and unaffordable for 56% of people on medium incomes.
To help young people get their feet on to the property ladder, the government has brought in a range of property-focused initiatives aimed at easing the housing crisis.
First time buyers can now open a special Help To Buy ISA with many of the high street banks. With interest rates of around 4%, these specially designed products offer customers a much better return on their savings. What’s more, the government add a percentage of the money that’s been saved to the pot when its time to buy, giving first time buyers more cash to play with.
The government have also announced that they’re scrapping planning rules that require developers to build a certain number of affordable homes for rent in order to increase the number of affordable properties available for first time buyers.
Another initiative announced at the beginning of the year is even more radical. The government has decided that, in order to provide more homes for first time buyers, it’s going to directly commission new developments on publicly owned land.
What this means for the construction industry
This huge demand for affordable properties is great news for the construction industry. As even more new builds will be sold rather than put on the rental market, profits from new developments are set to soar.
Though publicly funded developments and new build projects in urban areas will generally need to provide a percentage of affordable properties, the number of developments getting underway across the country is expected to increase dramatically.
The more affordable properties that come onto the market, the easier it will be for first time buyers to get onto the property ladder and to fulfil their dream of becoming a homeowner.