Tag Archives: european
UK is running out of bricks to build new homes
A shortage of bricks is a contributing factor in rising house prices in the UK over the past decade with new research suggesting 1.4 billion are needed to meet demand. With demand for new homes growing it means that the number of bricks, the most used traditional building material in the UK, cannot keep up with development, according to research from the National Association of Estate Agents (NAEA) and the Centre for Economics and Business Research (Cebr). The UK’s construction sector would require a total of 1.4 billion bricks in order to resolve the housing shortage in the UK, the equivalent of the total amount which would be needed to build all the houses in Leicestershire. The research report says that between 2006 and 2016, the growing UK population triggered exponential growth in demand, and has now outgrown the number of houses being built. Given that in 2016 the average UK home is made up of 5,180 bricks, resolving the housing shortage of 264,000 units would require 1.4 billion bricks. While house prices are impacted by numerous macroeconomic factors, they are fundamentally driven by the supply and demand of housing units. The shortage of homes has led to sharp house price appreciation and prevented many prospective buyers from getting on to the property ladder. The 1.4 billion bricks deficit could in theory build several of the UK’s famous landmarks several times over including 740 Big Bens, 40 Tower Bridges, 3,090 Manchester Town Halls, 4,540 Warwick Castles and 5,830 Conwy Castles. There are concerns that the impact of Brexit could significantly worsen the issue. In 2015 some 85% of all imported clay and cement which are primary brick components, came from the European Union and the report suggests that depending on how trade negotiations develop, Brexit could have a considerable impact on supply. It also explains that the UK’s brick stock steadily declined between 2008 and 2013 and only partially recovered in 2014 and 2015. Two thirds of small and medium sized construction businesses faced a two month wait for new brick orders last year, with almost a quarter waiting for up to four months and 16% waiting six to eight months. This can partially be explained by the slowdown in building following the recession, it adds, but even although new homes are becoming smaller there are still not enough bricks. Over the past 100 years, the size of the average UK home has shrunk significantly. In the 1920s the average dwelling was 153 square meters and now it is approximately half the size at 83 square meter, meaning homes have shrunk by 46% in the last century. This is partly a result of the fact families are generally smaller, so require less space, however the decrease can also be explained by financial restrictions. As house prices have risen by 45% over the past 10 years house buyers have been forced… Continue reading
Brexit uncertainty created pause in UK home borrowing in July
The UK’s mortgage sector was hit in July as a result of the European Union referendum with both the number and value of house purchase approvals falling month on month and year on year. The BBA figures show that house purchase approval numbers were 19% lower than in July 2015, though in the first seven months of 2016 they were some 2% higher than in the same period of 2015. The data also shows that remortgaging approvals were 6% higher than in July 2015 and in the first seven months of 2016 were 21% higher than in the equivalent period of 2015. Overall gross mortgage borrowing of £12.6 billion in the month was 6% higher than in July 2015 while net mortgage borrowing is 3% higher than a year ago. As the first lending figures since the decision to leave the EU not much can be taken from them, according to Rebecca Harding, BBA chief economist. ‘The data does not currently suggest borrowing patterns have been significantly affected by the Brexit vote, but it is still early days. Many borrowing decisions will also have been taken before the referendum vote,’ she pointed out. Andy Knee, chief executive of LMS, said that the figures suggest home buyers took stock in July. He pointed out that the value of loans for house purchases fell to its lowest level since March 2015 following a buoyant first six months of 2016, ‘What remains to be seen is whether this will become the norm or if August activity will be bounce back following the immediate shock. On the other hand, despite a small fall remortgaging is up as existing home owners capitalise on the record low mortgages available,’ he explained. ‘Following the vote for Brexit, swap rates fell leading to lower mortgage rates across the board. At the same time, intense speculation about a decrease in the Bank of England interest base rate to 0.25% and other monetary policy interventions have also contributed to lower rates, encouraged lending and driven home owners to take advantage of this,’ he said. ‘Anecdotally, there is little to suggest a lull in the demand for house purchase and remortgaging. We therefore expect activity to bounce back in the autumn months once the dust settles and some sense of normality returns,’ he added. According to Tanya Jackson, head of corporate affairs at Yorkshire Building Society, believes that people’s desire to own a property largely outweighed any uncertainty caused by the EU referendum in July. ‘That said, the full effects of the vote are unlikely to be seen until a few months after the outcome of the vote was announced, as those buying a home in July are likely to have begun the house buying process before the EU referendum,’ she said. ‘We do expect the outcome of the EU vote to limit market activity to an extent in the short-term as prospective buyers take a wait and see approach on how it affects their finances…. Continue reading
Improved rail links to London boost prime property prices in commuter towns
Prime property prices in key UK locations where train services make them commuter zones for London have seen prices rise in the second quarter of 2016, according to the latest index data. In Bristol, where commuters are within reach of London’s Paddington station, prime property prices have increased by 7.4% in the year to June 2016 with the second quarter of the year seeing a 17% rise in new buyer registration and a 19% rise in viewings. In nearby Cheltenham prime property prices increased by 8.6% year on year and 2% quarter on quarter, according to the index data from real estate firm Knight Frank, and this compared with annual growth of 1.3% in the UK wide prime property market. But in Oxford, another popular commuter city, prime prices increases by just 0.3% between April and June, taking annual price growth to 0.7% but the data report says that demand remains strong. In Oxford the slow down in price growth is attributed to uncertainty in the run up to June’s historic referendum and the decision to leave the European Union. ‘After several years of strong price increases, during which the city has comfortably outperformed the wider UK, the latest figures suggest that price growth at the top end of the market in Oxford has started to ease,’ said Oliver Knight, research associate at Knight Frank. ‘While the fundamentals underpinning the market remain unchanged, the reasons for the easing are twofold. Firstly, there was a softening in demand for prime property in the immediate run up to the EU referendum, with potential purchasers adopting a wait and see approach,’ he explained. ‘Secondly, and arguably more importantly, recent changes to stamp duty levied on the purchase price of the most valuable properties has made buyers increasingly price sensitive,’ he added. He pointed out that prime homes in Oxford worth more than £2 million rose in value by just 0.1% in the year to June as buyers and vendors factored higher purchase costs into pricing and offers. In comparison, properties worth up to £750,000, where the stamp duty burden is lower, rose by 1.7%. According to William Kirkland, Knight Frank Partner in the firm’s Oxford City Department, demand remains consistent and new high speed rail link at Oxford Parkway, which opened in October 2015, has helped stimulate demand in property markets to the north of the city as commuters using the line can now be in London Marylebone in under an hour. ‘As a result, there has been an increase in the number of Londoners looking to buy property in Oxford so far this year. Some 25% of all prospective buyers registering with Knight Frank's Oxford office in 2016 were based in the capital, up from 19% in 2015,’ he added. A growing imbalance between supply and demand continues to drive strong price growth in the prime Cheltenham market. There were 19% fewer prime properties available for sale across Cheltenham at the end of June year on year… Continue reading
