Streetwise Property Alert 16th June 2014

Here we are again at the start of another week and some UK property news and views…

Supply – What’s Coming

A just-out report by planning specialists Turley examines the five year housing requirements and land supply positions of 318 Local Planning Authorities (LPAs) in England and Wales, excluding London, between April 2013 and April 2018.

‘Local authorities are required under the National Planning Policy Framework (NPPF) to identify and update annually a supply of specific deliverable sites sufficient to provide five years’ worth of housing against their objectively assessed housing requirements. Our research and report shows that at least 211 of England And Wales’ 318 planning authorities fall short of their five year land supply targets.’

‘The majority of LPAs are falling short of their minimum five year housing land supply requirements, and this has significant implications for the pace of economic recovery. It is also likely to impact affordability for first time buyers wishing to enter the market. The need for housing remains high and is growing yet many LPAs still do not have adopted up to date NPPF compliant Local Plans. This leaves planning policy in a state of flux and uncertainty that will further delay the delivery of much needed homes across England and Wales. ‘The substantial shortfall is, however, only likely to deteriorate as annual dwelling delivery rates remain below those needed to meet the overall requirements across England and Wales.’ Food for thought.

Development Land – Price-Rising

According to Knight Frank’s latest Development Land Index, English land values rose by 7.3 per cent in the year to the end of Q1 2014. Developers expect prices to continue to rise. Most expect prices to rise by between 10 per cent and 15 per cent over the next year.

‘The expected rise in activity in the next 12 months is certainly supported by our survey, which shows that 74 per cent of respondents expect to increase their pipeline of land with planning, while 69 per cent expect to increase their strategic land holding. There is increasing debate about land banks and whether house builders are keeping land and not building it out in order simply to make a profit on re-selling it.

‘This goes to the heart of the question of whether strategic land, on which a house builder has agreed an option with the landowner, which may or may not lead to them gaining planning or buying the land, or which may be bought and have started the long process of going through planning, should be classed as a land bank.’ More to come on land banks.

L0ndon’s Strangled Supply

A report from the National Housing Federation suggests the supply-demand mix has reached ‘critical levels’ in London. Some 52,500 new households are expected to be created year-in, year-out up to 2021. This compares to just 18,310 new homes built during the 2012/2013 year.

The average property price in 2012 was £438,636, some 87 per cent up on the average for 2002. The average price in London is already 16 times the average wage and that difference is expected to rise by a further 43 per cent by 2020. The average London rent is £1,400 a month with rents expected to rise by 32 per cent by 2020.

‘England appears to be moving towards economic recovery, driven significantly by London’s dynamism and the city’s prominence as a global financial centre. But as the capital thrives, the result for ordinary Londoners is an overheated housing market with people struggling to buy or rent a home of their own. If things don’t change, London’s much needed economic growth could be stifled and businesses could struggle. Building more homes could be the crucial difference between a thriving world city and a capital in decline.’ Something to think about for sure.

All for now, see you again soon. We are, by the by, now proof-reading the IPA PDF for June and that should come out to you as an attachment on Wednesday.

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