Is the housing market slowing down? The average price for a home fell 0.3% to £207,308 in March, according to the Nationwide’s property index*
Britain’s housing market is expected to come under pressure in 2017 in the face of economic uncertainty caused by ongoing Brexit negotiations. In addition, household finances are likely to face the twin pressures of rising inflation and weak wage growth. However, as the UK housing market is beset by the problem of lack of supply and a continuing insatiable demand for residential property, commentators aren’t predicting a market crash.
A changing demographic picture
Nationwide has identified several trends that have emerged in the housing market over the last decade. It found that home ownership in England is at its lowest level since 1985, with the figure for 2016 being 62.9%. Ownership rates for those aged 35-44 have fallen sharply to 56%, from 74% in 2006.
There has been a marked increase in the numbers renting property; 20% of households in England are privately rented; ten years ago, the figure was just 12%.
Government intervention to increase supply
Successive governments have vowed to fix the UK’s residential property shortage. The government published a housing White Paper that updated its national planning policy to include the provision of starter homes available to households with an annual income of less than £80,000, or £90,000 in London.
However, in a new departure, the focus now includes the provision of more property for rent. The government will allow developers to offer cheaper rental property as well as affordable homes. Local authorities are to be encouraged to speed up their planning processes and are
required to update their development plans; where they don’t, the government will intervene. On the plus side, local authorities will be offered higher fees and new capacity funding to develop planning departments, and more funding for infrastructure.
The construction industry is facing a fundamental issue: a shortage of skilled labour in the major trades. The industry relies heavily on foreign labour for skilled and non-skilled roles. There are doubts as to whether the UK’s training programmes for bricklayers, plumbers and plasterers can produce enough home-grown talent to bridge the skills gap fast enough.
*Nationwide House Price Index, March 2017