Whether or not we see a change in UK government at the 2015 election there is already debate as to whether a change in government would impact the UK property sector. Ed Miliband, the Labour leader, has confirmed that if elected in 2015 his party would put in place procedures to build 200,000 new homes a year by 2020. This has obviously caught the attention of would-be property investors but would it actually make any difference to the ongoing affordability crisis sweeping across the UK?
If you put aside whether or not you believe these political ambitions to build 200,000 homes a year by 2020, do these figures actually make a difference and will they impact UK property prices?
Less than 24 hours after the Labour Party announced its new approach to housebuilding in the UK, a number of experts have already picked the policy apart. There is growing concern that while 200,000 new homes a year by 2020 appears to be an enormous figure, it is unlikely to have any major impact upon the ongoing affordability crisis. Indeed such has been the mismanagement of new home building across the UK that it will take decades to get anywhere near the level of homes required to fulfil demand.
Quote from PropertyForum.com : “Over the last 12 months there has been a significant increase in the cost of property across the UK and many people believe we are headed towards a house price bubble.”
If we take a look back at the pre-credit crunch figures, demand for new UK housing was already above 200,000 per annum and many experts believe that natural growth in the economy could push demand above the 240,000 level.
It was also interesting to see that the Labour Party is looking to introduce new laws which would basically reduce the ability of rural communities to complain about new housing developments and “new towns”. This in itself has the potential to cause major problems because the value associated with many rural properties is directly attributable to the area and the fact that it can be very sparse with regards to new developments. How would property owners in more rural areas of the UK feel if new developments saw the value of their property fall?
This is an issue which has also hit the headlines of late in relation to the proposed high-speed rail link (HS2) which could potentially split an array of communities across the UK where luxury housing is commonplace. On one hand we have the Labour Party suggesting it would overrule rural community resistance to new developments while on the other suggesting that it may put HS2 on hold if it regains power in 2015. Mixed signals to property developers?
Long-term housing problems
The issue of affordability and supply of new housing across the UK is not something which has just emerged over the last few years. There have been real problems for decades and many people still point the finger at governments of the past, and indeed the government of the day, with manipulation of housing supply intended to maintain forward momentum for UK property prices.
While a figure of 200,000 new properties per annum by 2020 has grabbed the headlines, even this falls short of estimated demand in the short to medium term. When will the problem of affordable new housing in the UK be addressed in detail?