David Bexon says that government restraints mean would-be homebuyers are increasingly unlikely to find the type of property they wish to purchase
Just when you thought it was safe to return to the housing market, two reports were published last week claiming that it is experiencing a severe disparity of supply and demand meaning that thousands of homebuyers are unable to find the type of property that they want to buy.
The main report, courtesy of PropertyFinder.com, stated that the majority of homebuyers (40 per cent) are looking primarily for three-bedroom homes while in contrast the majority of the UK’s property stock (41 per cent) has two bedrooms.
This equates to an estimated annual shortage of 125,766 three-bedroom properties and an excess of almost a quarter of a million two-bedroom homes. Propertyfinder.com has calculated that one-quarter of buyers are forced to buy a smaller home than they were looking for.
Indeed, monthly data from the new homes market, based on our stock levels, revealed a similar disparity. Over half (56.4 per cent) of all properties for sale were apartments and this figure has risen consistently over the last two years at the expense of larger properties. The proportion of detached homes has moved from a high of almost 50 per cent just two years ago to less than one-third (29.7 per cent).
Putting the brakes on
Such an imbalance could be contributing to the stabilisation of the UK housing market that is currently taking place with average prices more or less static since the beginning of the year – if buyers are not able to find the property they desire, they are instead forced to compromise and purchase a smaller home or to not move at all.
The report goes on to state that were we to see British housing stock match the desires of UK homebuyers, there would be some four million additional four-bedroom homes, 2.3 million more three-bedroom properties and 4.3 million fewer two-bedroom dwellings.
But to whom can we assert the blame for this mismatch of property types? And where does the responsibility lie for attempting to correct the problem?
One key consideration is that what homebuyers want and what they can realistically afford in terms of overall cost and mortgage repayments are two separate things.
Yes, of course, most of us would love to live in detached six-bedroom homes but our building society/bank manager may have other ideas. Although house prices have levelled out this year, inflation over the last ten years has been at a substantial enough rate to have seen properties in many parts of the UK double in value.
Where buyers could have afforded a three-bedroom house five years ago, they are now restricted to one and two-bedroom terraced homes or apartments.
This is particularly evident in the first-time buyer sector where many young people are struggling to get onto the property ladder at all and others are having to compromise in terms of the size, location and quality of their first home.
Apartment boom
However this is only a partial excuse. The remainder of the blame needs to be on the availability, not affordability, of housing stock. A fact of the development situation in the UK at present is that more apartments than houses are being built.
Our data covered over 80 per cent of the new homes market in the country and showed that last month almost one-third of the properties for sale were apartments – up 36 per cent from two years ago.
This is not, as some might say, a failure of house-builders to meet the needs of their customers, far from it in fact. House-builders are being prevented from building thousands of bigger houses with large gardens and several parking spaces as their hands are tied by the constraints of government at both a central and regional level. Instead they are being effectively forced to build block after block of two-bedroom apartments to meet the government’s targets.
Kate Barker was correct in her March 2004 report to highlight the gap between supply and demand as a key problem in the housing industry. However she was wrong to place so much of the responsibility for correcting this on to the shoulders of house-builders.
Major overhauls are needed to planning regulations to allow more flexibility with regards to housing density, size and local development planning restrictions.
Only when the government takes steps to translate recommendations into policy and practice will the house-building industry be able to translate this into action and can begin to address the issues of supply and demand. And only then will the disillusioned buyers have a greater chance of being able to purchase the type of house they want to live in.
David Bexon is managing director at SmartNewHomes.com
