The finger has been pointed at many possible reasons, but who or what is responsible for the current state of the country’s housing shortage?
Who is to blame for the housing shortage?
Poole-based property developer Richard Carr has worked in the industry for 30 years and has seen just about everything. He’s currently managing a number of high profile developments in the south of England including the £100m redevelopment of Salterns Marina in Poole.
New analysis produced by the London School of Economics has pointed the finger squarely at the government for the housing crisis, explaining that decades of planning policies that constrain the supply of houses and land and turn them into something like gold is to blame.
Real Estate firm Savills believes that the UK’s decision to leave the European Union has potentially opened up profitable opportunities for overseas investors, writes property development expert Richard Carr.
Although Brexit created some uncertainty for farm land values in the UK, Savills believes that the weak pound creates a favourable buying environment for overseas investors, whilst the reduction of supply may help to support values.
“The full impact of Brexit on all of the UK’s property markets will be very dependent on the macroeconomic background and the evolution of the story over the next two to three years. We must stress it is early days and there are many unknowns,” said Ian Bailey, head of rural research at Savills.
“Uncertainty is the key factor and it is very likely that farmland market activity in the second half of this year will be more subdued as potential sellers wait and see. Our research shows just over 100,000 acres were publicly marketed across Great Britain in the first half of 2016, which was on a par with activity for the same period of 2015.”
The current volatility of the UK’s economy sparked by the country’s decision to leave the European Union last month could provide profitable opportunities to foreign investors, writes Poole-based Richard Carr.
Post Brexit opportunities?
According to a report published by Arcadis, market conditions in the UK are ripe for opportunistic foreign investors by continuing to invest and store their wealth in prime property in London.
With property values stagnating and the sterling falling relative to the euro and the US dollar as a result of Brexit, latest reports suggest that buyers from Europe, Asia and the Middle East and ready to secure bargains in the London prime housing market.
Further falls are forecasted for the sterling before the year is out and some Banks don’t see it recovering until next year. Property agents are also suggesting that the recovery of prime London house prices might take a further year into 2018 meaning that those investing £2m into property may see their investments rise by as much as £250,000 in value.
It had been speculated that EU directives and European-derived regulations would no longer exist in the UK following the country’s decisions to leave the European Union, however lawyers and ecologists have suggested that they are likely to remain.
Brexit doesn’t mean an end to EU regulations
Currently, developers and planners have to take into account wildlife protection and air quality limits during planning applications, however many of those regulations were introduced by the EU.
Despite this, lawyers have insisted that developers would still have to comply with European-derived regulations which augment the planning system like environmental impact assessment (EIA), air quality limits and habitats protection.
“Many of these will be extremely difficult to unpick, and some reflect international treaty obligations, so are likely to remain, even when the UK finally leaves” said Angus Walker, a senior partner at law firm BDB.
With the UK voting to leave the European Union the debate has started on how cutting ties with the EU will affect differing industries. Richard Carr has been in the property market for over 30 years and has looked at the pros and cons.
Pros of leaving the EU
Reduction in red tape for builders
Increase in opportunities for UK workers
Reduction in regulation
No EU constraints
Cons of leaving the EU
Many construction workers are from the EU
Potential skills crisis
What affect will Brexit have upon the property market?
On the face of it, if the government can ensure that migrant workers are still able to work in the UK and they also provide extra funding to get British people into workforces then the industry willflourish.
Fears that the uncertainty created by EU referendum could negatively affect markets in the UK was dispelled by the construction industry which was an almost 8% rise in contracts during May, writes Property Developer Richard Carr.
Construction industry maintains strengh
According to Barbour ABI, £6.1bn worth of new contracts were awarded during May, which is 8% higher than the same month last year. The number of construction projects agreed in the UK was also over 10% higher than the same time 12 months ago.
Scotland led the way in terms of contracts awarded, with its Beatrice offshore wind farm project in the Moray Firth valued at £1.3bn.
London followed closely behind with its largest project being the £325.8m project with the Canary Wharf Group to build new office building Ten Bank Street.
Richard Carr reviews a new development project, which will look to offer affordable office space in the UK’s most prosperous city.
High office space demand
Does London have affordable office space?
London is the UK’s economic heart with its lucrative finance and technology industries. Figures show that London is one of the largest city-economies in the world, with a gross domestic product (GDP) of £565bn, which is roughly 17% of total UK GDP. Many companies have a base in this prosperous city, making demand for London office space extremely high.
Strong demand has pushed average London office rents to new heights. Prices in premier London commercial locations can be particularly high. According to Business Zone, for instance, the West End has the highest office rental prices in the world, at an average of £100 per square. For many firms, especially smaller enterprises, office space in some parts of London is simply unaffordable.