Propertyfinder.com analysed the mix of housing in the UK and then asked people looking to move how many bedrooms they hoped to have in their new home. The results show a startling mismatch between the homes that exist and the homes that people actually want to live in.
Annual oversupply of smaller homes
41per cent of the UKs housing stock has two bedrooms, yet only 21per cent of homehunters are looking for a property of that size. In an average year, 240,000 homebuyers are forced to buy two bedroom homes when they would like something larger. Only 3 per cent of homebuyers are looking for one bedroom homes, but because 9 per cent of the housing stock has one bedroom, 76,000 are forced to buy a home of that size instead of a larger property.
Annual shortage of larger homes
By contrast, 30 per cent of homes in the UK have three bedrooms, and yet 40 per cent of respondents to the survey want to move to a three bedroom home. This means there is an annual shortage of 125,000 three bedroom homes on the market.
Those wanting a four bedroom home are even worse off. Less than a tenth of the UK stock has four bedrooms, while over a quarter of homebuyers would like to buy such a home, bringing an annual shortfall of 224,000 four bedroom homes changing hands.
In total this means that around one quarter of average annual home purchases are of homes smaller than the buyers wanted.
Oversupply of very large homes
Not all of those wanting four bedroom homes are forced to trade down. The research also revealed a surplus of five bedroom homes among the UKs housing stock. A significant minority (8.5 per cent) of those ideally wanting four bedrooms are buying homes with five bedrooms or more instead.
If the homes that buyers say they want actually existed, there would be 4.3m fewer two bed homes in the UK, 4m more four bed homes and 2.3m more three bed homes.
Developers are building the wrong properties
The building industry is contributing to the problem by building homes of the wrong size. Data from smartnewhomes.com, a website specialising in new build properties, shows that as recently as last year, 68 per cent of the properties for sale on the site were apartments, the majority of which have two bedrooms, and yet only 40 per cent of buyers were looking for such accommodation. By contrast 30 per cent of the properties were detached homes, typically three bedrooms or more, while half of buyers were looking for homes of this size.
Availability, not affordability is the key
Although affordability will always be a constraint on people’s expectations, affordability is a simple function of supply. This is proved by the fact that there is a large oversupply of two bedroom flats, many of which are lying empty and unsold. As a result, prices of these homes have been falling in recent months. The lack of availability of larger homes has in turn affected their affordability as excess demand and insufficient supply has increased the gap between the price of a two-bed and a three bed home. On average the price increment up to a three bedroom home is an additional £49,800 (source propertyfinder.com).
Government policy forces high density building
The government must share the blame for the oversupply of two bedroom homes as planning requirements force a minimum number of homes to be built on a given site. That means homes that are simply too small for the average househunter. John Prescott’s £60,000 home scheme is only going to add to the problem.
Jim Buckle, managing director of propertyfinder.com commented: "UK homebuyers are not getting the homes they want. New build is only exacerbating the problem. Developers are simply not responding to demand and government policy is not helping. There is a large surplus of new build two bed flats, often in trendy locations, which is contributing to the UK’s oversupply of two-bed property. People actually want family homes. Our analysis helps explain why prices for two bedroom flats are falling, while demand for other types of housing is stable.
"Of course there is an element of wishful thinking in buyers’ aspirations. Many people set out looking for a larger home before realising that it is outside their budget and have to settle for something smaller. But this affordability gap is a determined by the availability problems.
"All other things being equal, three bedroom and particularly four bedroom properties should perform better in price terms than their smaller counterparts as long as the relative oversupply of two bedroom properties persists.
"There is also a small oversupply of very large homes with five bedrooms or more. To a large extent this reflects historic patterns of larger families and lower levels of divorce. Today’s smaller, more fragmented families have led demand to shift towards medium-sized homes."
Who wants to buy what sort of home?
Although in absolute numbers, couples and families dominate all the categories, in relative terms, homes of different sizes are favoured much more strongly by distinct groups of people.
Smaller homes are naturally most favoured by those currently living with parents or in shared rented accommodation as they seek to get a foot on the housing ladder. Single parent families are most likely to be looking for a three bed home, while families with two parents are after a four bedroom home. Older couples, who are more established and who had one or more parent living with them, wanted 5 bedrooms or more to accommodate the extended family.
Regional Patterns
Living patterns also varied widely from region to region. For example, those in Yorkshire and Scotland, well known for their canny ways, are most likely to have a lodger to supplement the household income. Londoners are least likely to live with their parents and most likely to share rented accommodation (as large numbers of principally young people move to London for work) while those in the South-West were most likely to live with their partners, because, as one respondent ruefully remarked, "there is nothing else to do in the West Country."
