When it comes to building houses in 2018 there is one thing for certain, you can’t build them quick enough. The government has set out ambitious plans but, ultimately, it’s down to developers to build the homes the country needs.
There have been pockets of activity across the country, with a few areas even outstripping activity in Greater London and the south-east. The market in London is always something of a micro-climate, especially when it comes to property but, since the Brexit vote, the market in the capital has been difficult, to say the least.
In the years leading up to the EU vote there were plenty of new developments in and around the centre of London. As building mushroomed out of the ground the price of property went through the roof and provided a golden opportunity for foreign investment. However, since then the market has changed, landlords have had new regulations and taxes imposed and the market over the last year has been fairly flat. House prices have decreased for the first time in many years.
Many developers have built specifically with foreign investors in mind. Afterall, they came with pockets of money to spend and were paying premium prices off plan in anticipation of higher returns when projects completed. However, falling prices have left many with their fingers burned, unable to sell at a, hoped for, premium and many have had to sell back to the developers.
This situation is not sustainable for any developer, or for the housing market, so what is the answer?
It may seem simplistic to say, but the answer is fairly simple. Build the homes that people need, where they need them and at a price they can afford.
This may be easier said than done, especially in London where land is at a premium and demand is high.
So, the question that needs to be asked is; who are the buyers now, and who will the buyers be in 18-months’ time? When you consider that half of the property sold in London in 2017 was bought by first-time buyers it stands to reason that this should be an important target market.
The key to ensuring the sale of property built for first-time-buyers, or even those downsizing or moving up the ladder, is to take advantage of any, or every, type of scheme available. Even with the changes to stamp duty raising a deposit is still an issue, so smaller developers need to use all the tools at their disposal to compete with the bigger housing developers. Whether it’s government led or through a third party there are plenty of solutions. If you’re building out a new development do you offer part-exchange or assisted move, are you signed up to help to buy or the Homebuy scheme?
The main point is it’s not just about high-net-worth investors and large portfolio landlords anymore. Building homes for people to live in has to be the motivation behind any new development if we are to solve the housing crisis, especially in and around London.
Just ask the question, how do we give our development the best chance? Of course, a clean site with a warm, stylish showhome is a good place to start.