A new survey of UK house builders has shown Simon Morris that the UK needs a greater supply of residential property to overcome the nation’s housing crisis.
It’s hard to deny that the UK housing market is recording impressive growth volumes at present. The Office for National Statistics’ July 2015 House Price Index found that the UK’s average house price grew 5.2% in the year to July 2015. In August 2015, UK residential property sales exceeded 100,000 units per month for the third month in a row, according to Property Wire.
Yet it’s also hard to deny that the UK has a housing crisis, and this country isn’t building enough residential property to address the problem. A BBC Inside Out investigation recently discovered that figures from 326 councils cross England showed that we built 457,490 homes between 2011 and 2014. The National Housing Federation estimated we’d need to build 974,000 homes within this period to address the problem.
Preventing house building
The nature of the crisis was recently underscored by the results of a new survey from Lloyds Bank Commercial Banking. The poll indicated that firms across the UK’s housebuilding industry believe that a lack of skilled workers and a slow planning process are the main contributing factors to the UK’s property shortage.
Select Property reported that 24% of poll respondents said that they believe that the current skills shortage is the biggest issue facing their industry at the moment. More than a third said that there aren’t enough suitable candidates to fill the number of vacancies in their profession.
Alasdair Gardner, head of house builders for Lloyds Bank Commercial Banking, commented on the results of the survey. He said: “This report sheds light on the key areas of support that firms in the sector need to ensure the long-term success and sustainability of the industry. Clearly, house builders are very concerned about the barriers preventing them from playing a role in alleviating the housing shortage.”
Consider the risks
It’s hard to doubt the results of this survey; the UK has a serious housing crisis and we aren’t building enough units to address the problem. This could indicate that the UK’s residential property sector will experience high levels of demand that could push investor returns up even further.
This may be a valid point, but Simon Morris would ask investors to air on the side of caution. Investors should be particularly wary of swapping pensions for buy-to-let. There are a number of serious risks attached to this strategy, so investors should consider all options before they pursue this investment plan to ensure they generate healthy returns.