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Residential Development: Latest Marketing Trends

In the run-up to the 2015 General Election, the state of Britain's residential property market has become something of a bone of contention among the major parties.

While all acknowledge the UK's woeful under-supply of housing stock, each has different solutions for solving it. But just what is the state of Britain's residential property market and what do the experts forecast for the coming years?

In this guide, we'll take a look at some key statistics and studies, as well as predictions on how Britain's house-building sector is expected to perform in the coming years.

Activity

An Englishman's home is his castle and the aspirational goal of owning a property is something political parties across the board have aimed to cater for.

However, in spite of the growth in the private rental sector, research from Savills indicates that most UK households currently reside in their own property – whether they're still paying off a mortgage or own the home outright.

Its analysis from March this year found that, despite signs of an early recovery from the market dip during 2009, the number of transactions has remained sluggish. These exceeded 97,000 as of the start of this year, but still remain markedly below peak historic levels.

And in terms of available housing stock, the latest government estimates state there were around 23.4 million dwellings in England as of March last year, which marks an increase of 137,000 properties on the previous year.

Housebuilding

Despite the dire warnings of the Barker Review of Housing Supply in 2004, successive governments have failed to generate anywhere near the ~250,000 homes a year needed to keep the market steady and ensure a healthy supply of affordable homes.

In the aftermath of World War II, Britain was building close to 300,000 residential properties a year, but in 2012-13, didn't even manage half that number.

However, it's not all doom and gloom – and the fermenting housing crisis seems to have spurred action in the sector. According to statistics from the Department for Communities and Local Government (DCLG), 2013-14 saw a 31 per cent rise in the number of new houses being built.

Similarly, the DCLG found that the last quarter of 2014 saw a nine percent year-on-year increase in the number of house building starts, as well as an eight per cent gain on completions in the same period in 2013.

What's the hold-up?

The Home Builders Federation (HBF) has laid the blame at the feet of the UK's planning system, complaining that in spite of recent improvements, it remains "slow, bureaucratic and expensive".

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"The major long-term constraint on house-building over the last two decades has been the lack of land with viable and deliverable planning permission," said the organisation in a recent press release.

The HBF conceded that the introduction of the National Planning Policy Framework has helped, but warned that burdensome pre-commencement planning conditions had resulted in numerous delays for its members.

However, the government's reforms – and particularly its focus on local decision-making – have also come under fire for encouraging resistance to residential development in the form of so-called 'NIMBYism' (not in my back yard).

Specialists in Construction Insurance

Speaking to the BBC last year, Town and Country Planning Association chief executive Kate Henderson cited the doubling of legal challenges on local plans by the planning inspectorate as evidence of this trend.

"There's a lot of pressure from politicians in certain areas to suppress housing figures," she said.

Land Banking

Those outside the housebuilding industry have also been keen to point to the practice of "land banking" as one of the key barriers to new homes.

This term describes the land residential developers have in stock, but have not yet begun to build homes on. And while this stock is clearly in existence, the reason for the build-up is often disputed.

Figures from the Local Government Association (LGA) in 2013 suggested 400,000 homes that had been granted planning permission were going unbuilt.

Then-planning minister Nick Boles hotly disputed these claims, commissioning research that showed of the 500,000-plus homes that had been granted planning permission, the vast majority (around 85%) were either in the process of being built or progressing towards commencement.

More recently, the HBF also hit back at these assertions – stating that three-to-four years' worth of stock was necessary for housebuilders to sustain business through the "long and uncertain process" of gaining the necessary permissions to proceed with construction.

It went on to state:

  • Land banks have fallen in total by 20% in the last five years and private sector- led house building sites by 25%.
  • 63% of individual plots in consented land banks are actually under construction; of the remaining plots more than half are economically unviable.
  • We estimate that just 72,000 consented plots are un-started and considered economically viable.

Policy Pledges

Housing has also become something of a political hot potato as the General Election looms, with pledges on addressing the state of the market featuring in all the main – and 'marginal' – parties' manifestos.

Labour aims to ensure 200,000 homes a year are built by 2020, as well as empowering local authorities to give priorities to first-time buyers priority on new homes.

The Conservative Party set out aims to enhance Britain's stock of affordable homes, including 200,000 starter homes that will be set aside for first-time buyers and offered at a 20 per cent discount.

It also pledged to deliver an additional 275,000 homes by 2020 and extending the controversial Right to Buy scheme to include tenants in Housing Associations.

The Green Party and UKIP also promoted the housing agenda in their manifesto, with the former aiming to provide 500,000 social homes for rent each year for the next five.

UKIP's housing pledges focus on unlocking brownfield sites and providing incentives to developers, while both parties want to repeal the National Planning Policy Framework with a view too streamlining Britain's planning system.

Forecasts

Each of the parties seeks to address the UK's housing shortfall in different ways, which means the tactics that'll be enacted over the next five years will hinge upon the outcome of the General Election.

Forecasts from JLL suggest that:

  • The price of houses will grow by three-to-five per cent over the next five years
  • Transactions will stabilise around 1.31 million per year
  • Completions will grow to about 150,000 per annum.

Assessing solutions such as the creation of Garden Cities, Housing Zones, small developer funds and extensions of Help to Buy, JLL concluded that:

"Individually, none will solve our supply issues, but that collectively they could take huge strides towards alleviating our chronic undersupply. However, even this will be insufficient to meet targets, as supply chain constraints suggest the UK does not have capacity even if we could galvanise this momentum."

What's to come?

It seems the future of the UK's housing stock rests largely upon the outcome of the General Election and the type of solutions the next government will implement.

If you've got any views on the parties' plans or the reasons behind Britain's under-supply of housing, be sure to leave a comment below or get in touch via Twitter.

And if you're looking for a quality structural defects insurance for an upcoming residential development, be sure to get in touch with us today.

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