Depressed home construction rates have left a critical gap in English real estate, a potential 1,000,000 unit shortage with dire socio-economic implications. With demand for homes outpacing sluggish building levels, analysts are urging action and intervention in order to mitigate this impact and circumvent another cycle of property market boom and bust. The following article from Property Wire has more on this.
There will be a shortage of a million homes in England by the end of 2010 which could result in serious social and economic consequences including a cycle of property boom and bust, it is claimed.
A new Discussion Paper launched today (Tues Sept 29) at the Labour Party conference in Brighton by David Pretty and Paul Hackett for the Smith Institute and PricewaterhouseCoopers and published by the Town and Country Planning Association, warns that with house building at its lowest level in 80 years the gap between supply and demand this year alone will be around 150,000 properties, equivalent to a city the size of Nottingham.
It concludes that at least 250,000 new homes need to be built every year to match annual population growth, and even higher to replace aging housing stock and the accumulated backlog.
‘Our analysis shows that in England we could be approaching a one million housing shortfall by the end of 2010.
If we ignore this problem and reduce public intervention and investment in new supply of both private and affordable housing, there could be serious social and economic consequences, not least record housing waiting lists and more pain for beleaguered first time buyers,’ said Pretty.
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‘Further action, such as more land release, support for new entrants in the market and expansion of the private rented sector, is needed to avoid a return to a cycle of housing boom and bust,’ he added.
Speaking at the launch TCPA Chief Executive Gideon Amos, said the problem needs to be approached in a sustainable way. ‘In short we need quantity and quality.
If we don’t the housing supply crisis, already urgent, will get worse.
The alternative of allowing housing provision to sink to a new all time low could be storing up even more difficult problems ahead,’ he said.
‘Planning can play a key part, but we need a package of solutions as set out in this report to get us back to a more balanced housing market.
We will be drawing the findings of this report and our agenda for development in the downturn to the attention of all major political parties,’ he added.
The report also points out that the lack of new homes will hamper economic prosperity, exert considerable upward price, exacerbate wealth inequalities, constrain public service delivery, and thwart homeownership.
‘As a result of the mortgage famine and the economic downturn, housing completions in 2009 are likely to be under 100,000, a 40% drop from its recent peak.
While housing supply has fallen, demand has increased,’ it says.
‘The housing market is showing early signs of recovery and house prices could return to 2007 levels within five years.
But, because capacity in the housing sector has been dramatically reduced it could, without sustained public intervention, take at least seven years for housing production to get back to pre-slump levels, let alone match housing needs.’
This article has been republished from Property Wire. You can also view the article from Property Wire, an international real estate news site.