Tag Archives: finance-update
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
Research suggests DIY can be a false economy for UK home owners
Home owners undertaking DIY to improve their home may find it is a false economy with research suggesting that it is likely to be botched and end up costing the owner more. Some 72% of home owners in the UK take on a DIY job to save money but more than a quarter, 27%, admitted they have botched the work and 34% left it unfinished, according to research from Halifax Home Insurance. The study also found that among those jobs they were willing to do themselves, some 77% would be confident to tackle painting, 75% gardening, just under half would attempt to put up shelves and just under 40% would put up wallpaper. The research shows a continuing decline in home improvement skills for young home owners. Only 62% of 18 to 24 year olds said they felt confident changing a lightbulb compared to 93% of over 55s. This was also true when it came to tiling, with 32% of over 55s feeling confident compared to only 13% of 18 to 24s. The North East of England topped the tables for confidence in DIY tasks with 82% confident about painting, 51% wallpapering and 55% putting up shelves while Yorkshire and Humberside were the most green fingered with 86% feeling confident at gardening. ‘Most people will take on DIY jobs at some point, so it’s important they make sure they are adequately prepared beforehand. They should check they have the right tools for the job, consider taking out accidental damage cover in case things go wrong, and avoid taking on too much. It’s essential to call in the qualified experts when it comes to jobs such as gas, electrics and plumbing, as home owners can risk invalidating their home insurance policy if things go awry,’ said Martyn Foulds, senior claims manager at Halifax Home Insurance. Last year alone, Halifax Home Insurance recorded over 16,000 accidental damage claims, including DIY related incidents. In total the insurer paid out more than £11 million for accidental damage, costing an average of almost £700 per claim. Meanwhile, a separate piece of research has found that first time buyers are paying a hefty price for snapping up cheaper properties that need renovating and undertaking the work themselves. According to specialist insurance broker Towergate over a fifth of first time buyers who are eager to get on the property ladder are turning to lower priced properties that need doing up and cutting costs by carrying out the work themselves, spending £4,600 in the process. However on top of the initial cost of the work, some 27% of new home owners have had to fork out extra cash for a professional contractor to fix their mistakes, costing an average £2,358. And separate research among members of electrical contracting industry body NICEIC has shown a summer spike in callouts to fix DIY mistakes, with 17% of contractors reporting an increase in requests during this time of year. ‘Given the… Continue reading
