Tag Archives: construction
Legal experts says major changes are needed to meet UK’s chronic housing shortage
Seismic changes are needed if any of the top political parties' housing targets in the UK are to be met in the short or long term, it is claimed. Planning permissions, regulatory requirements, funding, the economy and lack of skills have all added to the current housing shortage, according to Rosemary Edwards, partner and head of residential development with corporate solicitors Shulmans LLP, who has acted for many of the UK's top house builders for over two decades. ‘I have heard of many major house builders being accused of land banking but this is patently ridiculous. A house builder's business is entirely based on selling homes. If they can build them and sell them, why would they hold back?’ she said. In reality a house builder will struggle to sell more than say 40 houses a year on any one site, so natural market forces mean that a scheme of 200 houses may take five years to build out. Increased planning and regulatory hurdles have added time and cost, such as the new Community Infrastructure Levy, now effective in some districts, including Leeds. Staff shortages in local authority planning departments can also add to delays,’ she explained. She also pointed out that there is also the problem of mortgage finance. ‘We may say that we need 200,000 new houses or more each year, but not everyone who wants a house can afford one and mortgage eligibility criteria have tightened up considerably in recent years,’ added Edwards. According to Tim Halstead, Shulmans' managing partner and a nationally acknowledged authority on house building, while there's a great deal of talk about building on brownfield sites, doing so throws up as many problems as it supposedly solves. ‘Such sites often have several land owners, so you have to bring them all together or persuade the local authority to exercise compulsory purchase powers. That all takes time and of course you have to build houses, where people want to live which may not be on a former industrial site,’ he said. ‘There is often the added complication of expensive clean-up of contamination or increased costs arising say from digging out old foundations. Those costs can make schemes unviable without subsidy. As long ago as the 1980s we worked on a site in Hull that got a central government grant of £20 million but there just isn't that kind of money around right now,’ he added. Halstead also pointed to a chronic UK skills shortage being another factor in the low numbers of new houses being built. ‘Many skilled construction workers left the industry during the recession. You can't just click your fingers and bring in an endless supply of tradesmen to get new houses built,’ he explained. ‘House builders are now competing, more so than ever before, to recruit skilled labour and to maintain relationships with quality contractors and suppliers. That drives up costs and can cause delays,’ he added. Recent proposals include encouraging small and medium… Continue reading
House building land prices fall for first time since 2012, latest index shows
After several quarters of slowing growth, the average value of green field residential development land in England and Wales fell in the first quarter of the year, the first decline since December 2012. Prices fell by 1.8% in the first three months of 2015, taking the annual change to -0.5%. However the picture across the country is more mixed with the land index from real estate consultants Knight Frank showing that development land prices in prime central London also stalled in the first three months of the year. Land values in price central London remained unchanged in the first quarter, the first time they have not risen since the index began in 2012. But on an annual basis, prime central London development land prices were up 18.5% in the first quarter. This slowdown is the result of a gradual slowing in price growth over several quarters, according to Grainne Gilmore, head of UK residential research at Knight Frank. ‘Across the country, many house builders have been replenishing their pipeline of land over the last 12 to 18 months, both consented and strategic. For strategic land, they have started guiding it through the planning system. As such, demand for consented land has eased. Sites which are oven-ready and perfectly located are still attracting interest however,’ she explained. She pointed out that there has also been a notable trend emerging of an increased appetite for strategic land among larger house builders as this can result in higher margins. But on a short term basis, the development land market, much like the housing market, has also been affected by the upcoming election, with some developers and house builders deferring decisions in recent months until the outcome of the election is clear. ‘All the parties have pledged to boost housing supply in the years to come, through a variety of schemes from brownfield regeneration funds to support for small to medium sized builders,’ said Gilmore. ‘A theme that is set to continue through the election and the rest of the year is the increased cost of building. Material and labour costs continue to rise, and this is also putting downward pressure on land prices,’ she added. Continue reading
Residential building land prices rise in Australia
There is a growing divide between demand and available supply in vacant residential land in Australia as land price rise and detached house building peaks, according to a new report. The number of residential land sales fell by 11.8% over the year to the December 2014 quarter while in contrast, the weighted median residential land value increased by 2.8% and was up by 6.3% over the year. The data from the latest HIA-CoreLogic RP Data Residential Land Report provided by the Housing Industry Association, also shows that the increase in the weighted median value was driven primarily by Sydney, with significant growth also evident in Perth and Melbourne. ‘As with all aspects of this housing cycle, there are wide divergences in land market conditions around the country this is clearly evident across the six capital cities and 41 regional areas covered in the report,’ said HIA chief economist Harley Dale. ‘There is insufficient shovel-ready land in some markets and this is placing undue upward pressure on residential land values. Construction of detached houses looks to be peaking for the cycle, but there is unrealised demand out there because of that lack of readily available and affordable land,’ he explained. Overall the price of residential land per square metre increased in Sydney, Melbourne and Perth in the December 2014 quarter, with Sydney remaining the country’s most expensive land market by some margin. Across regional Australia, the most expensive residential land markets are the Gold Coast and the Sunshine Coast in Queensland, and the Richmond-Tweed region in New South Wales. The least expensive markets can be found in the South East region of South Australia, and the Mersey-Lyell and Southern regions of Tasmania. According to CoreLogic RP Data research director, Tim Lawless, the number of vacant residential land sales has been trending lower since the middle of 2013 and concurrently, median land prices have been rising to new record highs. ‘The opposing trends are a clear sign that demand is outweighing supply which is pushing land prices higher. Higher land prices ultimately lead to less affordable homes. It is the high cost of vacant land which significantly contributes to the increasing cost of housing. Ideally we should be seeing more land brought to the market and sold during this period of low borrowing costs,’ he added. Meanwhile, the latest Australian Bureau of Statistics housing finance figures show that the number of loans to owner occupiers (excluding refinancing) declined modestly in February although the number of loans to those purchasing and building new homes increased slightly. The number of loans to households building or purchasing new homes increased by 2% in February, a relatively positive result against a backdrop where lending to households purchasing existing homes eased back modestly. The number of loans to owner occupiers buying established homes, excluding refinancing, fell by 0.9% in February to a level 4.9% weaker compared with the same time a year ago,. According to… Continue reading
