The price of housing is climbing to unsustainable levels in certain key UK cities. This is bad for employers and workers – but perhaps an opportunity for land investors.
The prices of homes in London, Bristol and Cambridge have risen much higher than the UK average in recent years. This causes difficulties for would-be homebuyers and for employers – suggesting opportunities for homebuilders and land investors, while posing important policy questions for public officials https://luxurylifehomes.com.
Of course the challenges created by the housing shortage in the UK have many causes – greenbelts, height limitations on buildings in London, social housing policy, lending limitations and the financial crisis of 2008, all against the backdrop of a rapidly rising population. One proposal is to simply expand London’s built environment one mile into the greenbelt that surrounds it; that could add one million new homes to the housing stock in a place where the housing shortage is most critical. As they are accustomed to turning raw land into infrastructure-supporting housing and commercial development. But such a concept would naturally face much resistance from those who enjoy the benefits of living on the current greenbelt boundaries.
The first UK Cities House Price Index provides good perspective on the scenario as it affects both London and the rest of the country. As it turns out, the outsized cost of housing is pronounced in London, Cambridge and Bristol, skewing the country’s averages in ways that both overstate the national housing cost landscape while under-representing the more dire situation in these three population centres.
Developed by Hometrack, a residential property market specialist, the UK Cities House Price Index encompasses house price growth across 20 cities. In the first Index report issued in November 2014, the study found that urban house price growth in the preceding 12 months (November 2013 through October 2014) was 13.2 per cent across the board. However, counting the growth rate in smaller towns the national home price growth rate is less at 8.9 per cent.
While this is good news in less populated places, the problem remains critical in places such as the capital city. What are the effects?
• Household formulation is postponed, as younger people cannot afford to move from their parents’ abodes to form new families.
• Employers in the larger cities bear greater costs. Former Labour housing minister Nick Raynsford told the Financial Times that employers are talking to him about how housing prices affect their businesses and workforces. “We need to ensure that there is enough supply of labour for London’s needs,” he told the newspaper. “This is a really serious issue, with people forced to move further and further with a longer and less reliable journey into work.
• Lower-paid workers have disincentives to work. According to the policy officer at Shelter, the housing charity, some people at the lower end of the economic spectrum are travelling two hours each way to get to jobs. This probably has the effect of discouraging working and increasing reliance on public benefits instead. Shelter research also indicates that some central London councils are moving homeless people to distant places such as Exeter and Manchester where renting costs were lower.
As the difficulties and costs of the insufficient housing stock continue to build, it’s likely that at least some employers will consider relocating to parts of the UK where housing is more affordable and there are more workers to choose from. Who assemble investors to acquire and develop land on which new homes can be built. As statistics show, the demand for new homes varies by region, but homebuilders and their financial backers are able to identify where the best opportunities will most likely yield good results.House Builders in Christchurch – Choosing the Right Suburb