Tag Archives | housing

One measure announced in this years budget was government support for mortgages loans. A new Help to Buy scheme will allow people to obtain a 20% interest-free loan from the government, as long as they put down a 5% deposit and buy a newly-built property

However, some have suggested the fundamental problem in the UK housing market is the persistent shortage of housing – and increasing the availability of credit doesn’t directly address this problem. The number of households is forecast to grow by 232,000 a year until 2033, and yet the current rate of home construction is struggling to increase above 100,000 a year.

In 2007 the Government set a target of increasing the supply of housing to 240,000 additional homes per year by 2016. (link) Within this overall target was a commitment to deliver at least 70,000 affordable homes per year by 2010-11, of which 45,000 were to be new social rented homes. However, since the credit crunch of 2008, this target has severely fallen behind as housing construction has slumped.

Source: House building Quarterly Dec 2012

Housing completions have fallen close to 100,000 a year – well below level needed to meet the growth in the number of households.

There is hope improved mortgage availability will increase private sector construction. But, it doesn’t resolve other issues, such as planning regulations and local opposition to building homes on a large scale.

Demand growing faster than supply

Graph showing that demand for housing stock has been growing faster than net additions to housing stock, pushing up house prices.

source: Understanding supply constraints in UK housing market, Shelter

Forecasts for future number of households