There is no doubt that the UK property market is on something of a high with prices in London dragging the whole of the UK into potentially dangerous ground. There are a number of anomalies which have come into play to feed the frenzy for UK property such as issues overseas, improved finance for first-time buyers as well as a lack of suitable properties in many parts of the UK. So what can the UK government do?
If the UK government was introduce an array of taxes aimed at cooling the UK property sector this would not go down well with investors. So what other options does the UK government have?
Redeveloping empty high-street shops
As the Internet becomes a much greater part of everyday life in the UK, there is no doubt that the number of empty shops on the high-street continues to grow. There is speculation that the UK government is looking to bring in an array of changes to pension fund investment rules which would effectively allow investors to use their pension assets to acquire empty high-street properties and convert these into flats.
Quote from PropertyForum.com : “In a move which many people were initially sceptical of, Heritage Property has this week launched a new online TV channel which will feature a walk-through video of each and every property the company is instructed to sell or rent.”
There is some debate as to whether this will again further feed the frenzy of UK property bubble but if we put the issue of pension fund money aside, is this a short-term solution?
A flood of new property on the market
There is no doubt that a flood of new property onto the market would reduce the upward pressure on property prices, especially those which are more in demand. The simple fact is that there are a far greater number of potential buyers compared to the ratio of properties available at the moment. Increasing the number of properties available would simply expand the options for buyers in the UK and perhaps take some of the steam out of the market.
Perhaps the UK government needs to encourage developers to convert empty properties on the high-street to more affordable forms of housing. There is the potential to do this with tax breaks and other financial incentives and if the government was to retain the bar on pension fund money investing in housing stock this may well be the answer.
When will commonsense prevail?
One of the major concerns about the current upward momentum of the UK property market is the fact that while prices are reaching “unsustainable levels” in some parts of the country, there is still demand even today. Whether indeed we are moving towards the fear and greed element of an upward momentum property market remains to be seen, but sometimes if you take a step back and look at property prices in the cold light of day, do they really offer as good a value as you think?
It seems something of a no-brainer for the UK government to incentivise developers, excluding pension fund money, to convert unused shops on the high-street to affordable housing. Whether indeed the government would be brave enough to make such a move remains to be seen because historically the balance between excessive demand and limited availability of property has always been maintained.