The Property Market Cannot be Overlookedfjpinvestment
With the announcement of Boris Johnson as the new prime minister last month, the focus continues to stray from the property market and has kept the spotlight on the political situation and trying to break the deadlock surrounding the outcome of Brexit.
We cannot let Brexit overshadow the challenges that are facing the UK property market – specifically, enduring the housing crisis.
A crisis on the horizon?
The UK is currently facing a potential housing crash unless something is done. Currently, the UK needs to produce 300,000 new homes a year to meet the expected minimum demand for property and to aid first-time buyers in the market to purchase their first home.
The government claim that plans are to continue to build these homes and meet this target by encouraging the construction of new build homes. With interest rates being held at the low rate of 0.75%, it should encourage investors and thus developers in an attempt to meet this aim.
Whilst it is essential that the government’s policies are implemented to support this target, this problem could benefit from some creative solutions, more than what is currently being done.
Breaking down the issues in the property market
The major problem faced is the current imbalance of supply and demand. Many first-time buyers are in need of affordable housing, and recent regulations have deterred investors from expanding their current housing portfolio. With high demand for renting in the UK, this too negatively affects the housing market with demand again not being met. While something of a solution would be for homeowners to sell property, providing supply to those that need it, more needs to be done.
The issue here goes even further than this, however. In some areas across the UK, the major issue faced is the sheer quantity of homes that are left derelict and unusable in a state of disrepair.
Looking elsewhere across the UK, we see something of an opposite problem, with housing being bought out by a select few making the distribution unstable.
When identifying future housing policies, Boris Johnson needs to ensure that simply throttling the increase of new property projects is blissfully ignoring the underlying issues in the market itself – innovative solutions need to be introduced to tackle this.
What changes can be introduced to the property market?
We have received some positive comments from Johnson’s campaign offering some positive steps to aid the property market.
Johnson has revealed intentions to scrap stamp duty for homes worth up to £500,000, and halving those over this value. This should help to encourage investors to increase their property portfolios. This move has been supported by industry stakeholders, offering some much-needed easing particularly for first-time buyers.
With home ownership rates falling across the country, especially amongst young professionals, this change appears much needed. This change, on paper, should encourage older people sitting on large property assets to downsize also, improving availability for those needing a larger property thus aiding the economy as a whole.
With any new proposals on hold as Westminster breaks for the holidays, time will tell whether these changes will be implemented, or whether there will be a complete focus on the Brexit saga. With the new PM at least acknowledging the need for changes, this can only be seen as a positive sign.