The supply and demand of housing
The news is full of stories about falling house prices, fewer mortgages and house builders cutting staff and delaying new build housing projects. These headlines have overshadowed the most significant factor: that there are not enough houses for the population of Britain.
The reality is that a slow down in house building will take a long time to return to capacity, exacerbating the basic problem of supply and demand. The undersupply of housing has been an issue for a number of years, and whilst government targets began to improve, these are now being hindered by the reduction in mortgages available and rising interest rates.
Homeowners are considering their options carefully and many contemplate building extensions rather than moving to a bigger home. In view of the uncertainty of energy prices, energy capping has also become more common. This is where an arrangement is reached with the energy supplier to sign up to a supplier for a fixed term (generally 18 months) and with a fixed price.
Some homeowners are also adopting methods to reduce energy consumption, such as installing energy efficient boilers, or insulating their homes. This brings an initial investment, but can lead to significant savings in the long term. Advice on the options is essential, and further information can be obtained from our Energy Efficiency section, or alternatively by completing the online enquiry form.
For the social housing sector, lack of affordable housing has a devastating impact. Social housing associations advise a radical shift in the way of thinking, to try to break the stagnant triangle of lenders unwilling to lend, buyers who cannot buy and builders who daren’t build.
There are 1500 housing associations managing around 2.5 million social homes nationwide. In London, an influential “G15” group of housing associations who control 400,000 social housing properties have been discussing the most effective ways of solving the stalemate. They recognise that the surplus they make is derived from sales, largely through ‘Right to Buys’ and shared ownership, and if they cannot sell, they cannot make a profit, which would enable them to invest in building new homes. As banks are reluctant to lend, they do not have sufficient funds to support development projects, and believe that the government should help.
The industry awaits the outcome, with hopes it will be soon, as several of the major builders have already announced redundancies and face further decline.
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