Multi-pronged approach for London’s housing crisis
Commercial and residential property services provider JLL in its predictions for 2017 has observed that the number of new houses likely to be built this year will be slightly below the 2016 level in London.
This can be collectively attributed to legislative changes, UK’s exit from the EU, and weaker domestic demand because of an increase in the cost of building construction. At the same time, it presents a good opportunity for international investors to explore the UK residential market for attractive returns in the long-term.
In 2015, more than 24,000 new houses were built, but in 2016, the number fell drastically to an estimated 16,000. If the number of new homes to be built in 2017 falls beyond this level, then, it could further deteriorate the housing crisis, as prices will shoot up. As of now, buying a home in London is a major challenge for working professionals, especially first-time home-buyers, in view of the high cost of acquiring a built home. If the current level of housing supply does not increase in the long-term, it could mean that thousands of working professionals will remain outside the housing network.
As the stakeholders of the housing sector wait for the Government Whitepaper on housing, it is imperative for the London Mayor’s initiative on housing to take shape in the expected manner. It will be also interesting to see how the private sector is engaged by the Local Authorities in addressing the housing needs while protecting the interests of the Councils.
There are plenty of innovative models to speed up the pace of building construction. In fact, JLL has emphasised on off-site construction in the UK. Technology adoption in 2017 should be quicker to reduce the housing supply-demand gap. Off-site construction technology offers several advantages and can significantly reduce the time taken to bring a house to the market. The government should promote this technology among the stake-holders backed by policy support.
It is interesting to note that international investors are continuing to show faith in the London property market. Last year saw record levels of investment by the international investors and the trend is likely to continue in 2017. London’s housing stakeholders should engage such investors to streamline capital flow into house building. This will also help tackle affordable housing from the Councils’ perspective.
The fundamentals of the UK property market, especially, London, are strong and offer assured returns to investors. The weaker sterling has made London an attractive destination for international investments and this should become a catalyst to spur housing growth. As Local Authorities become entrepreneurial, it will create a win-win situation if they join hands with international investors.
If you are keen on investing in a residential property in London, feel free to connect with expert real estate agents at any of the global offices of Strawberry Star.