A simple message to the Government – Build, Baby, Build! – The Property Chronicle
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A simple message to the Government – Build, Baby, Build!

The Economist

Unlike most issues in politics today, there is widespread agreement that the UK is facing a housing crisis.

While new-build volumes have risen since the financial crisis of 2008/09, they are still way short of the 300,000 per year target that used to be achieved comfortably in the 1950s.

In recent decades, the combination of higher net immigration and a general rise in income – a key house-building driver – has put pressure on the housing market. Not surprisingly, inadequate supply has seen house prices rise sharply, even allowing for the latest down-turn in London, while regional price disparities have widened markedly – they are now at unprecedented levels.

As such, many aspiring home-owners, especially those under 35, seeking a property in the more prosperous areas of the country, are being priced out of the market. Whilst a lucky few can raise a deposit from family members, many cannot.

Furthermore, obtaining the necessary mortgage is harder than before the financial crisis – lower Loan-to-Value (LTV) ratios are being prescribed by lenders.

As a result, many younger people have accepted – mostly reluctantly – that renting is their best available option.

Importantly, since the financial crisis, the number of small house-builders has fallen away quite sharply. As such, it is the three largest  Volume House-Builders (VHBs) – Persimmon, Barratt and Taylor Wimpey – who are the sector’s ring-masters. This trio is building around 50,000 houses annually and they continue to deliver enviable returns each year to their shareholders. More new houses, higher average prices, increased profits, a rising share price and robust dividend growth.

So how can they and their smaller counterparts be encouraged to build more homes?

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