Difficulties In The Property Market
The Chartered Institute for Housing (CIH) President, Professor Gray, recently highlighted the widening shortfall between new housing supply and ongoing demand, ongoing weaknesses in mortgage lending and increasing rental costs. He pointed out that less than one home is being built for every two needed with increasingly severe consequences.
Professor Gray also confirmed that with mortgage lending constrained, more and more people are becoming part of 'generation rent' and emphasised worrying trends around the cost of living for renting households with a new form of housing inflation becoming evident, rental inflation.
Andrew Dewar, our Joint Senior Partner, believes several areas need urgent review.
Firstly he believes that the Government’s attempts to have landowners and builders pay for the supply of affordable homes, by changing planning rules for new builds, is having a massively negative effect on new starts. Many landowners are now dissatisfied with the ultimate price they receive and builders are dissatisfied as their margins are dramatically reduced and their risks increased.
"...First Time Buyers are the essential oil
needed to unstick the glued-up cogs
of the UK property market..."
Secondly he considers that an urgent overhaul of the lenders’ criteria for borrowers is needed and that lenders must also start looking at more innovative ways to help First Time Buyers in particular, get on to the property ladder. First Time Buyers are the essential oil needed to unstick the glued-up cogs of the UK property market. A few lenders do offer versions of shared equity schemes, but they are rare and complicated and with very stringent criteria. More needs to be done in this area.
Thirdly the virtual moratorium by lenders over the last three years on buy-to-let mortgages, has resulted in a shortage of rental stock with rental prices soaring. This is putting 'renting' out of reach for many of those who cannot afford to get on the 'ownership' ladder, most of whom are our First Time Buyers.
Everyone seems to be waiting for, or expecting 'someone else' or some magical 'something' to happen to sort the problem. Neither is coming. What is actually needed is some joined-up, adult thinking, by the lenders and the Government, backed up with decisive action to sort this growing issue.
Property Market News July 2011
Summer Property Market Comment
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