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Bank of England
Mortgage Market Review
Although the government and the Bank of England seem to be taking a very laid-back attitude towards the UK's housing shortage, calls for action have become desperate pleas as experts predict the worst case scenario.
According to the Guardian and Shelter in a combined report, if nothing is done to tackle the shortage issue, average house prices in England could double in just 10 years to £446,000 rising to £900,000 by 2034.
With affordability almost like an impossible dream in the UK at the moment, if this situation plays out as predicted an entire generation will be priced out of the market, unable to buy a property without a vast deposit and football player-sized income. The forecast becomes so severe in the report that by 2040, more than half those aged 20 to 34 could still be living at home with their parents.
Despite the government bleating on about how they want to make home ownership possible for more people with their completely ineffective measures such as Help to Buy - almost instantly truncated by new borrowing criteria brought about by the Mortgage Market Review in April this year - the crux of the housing crisis is still being ignored. There simply aren't enough homes to go round.
It's not entirely the fault of the current government as this hot potato has been passed down from preceding governments for decades. Population increases and changing demographics mean that 250,000 homes need to be built every year however, in 2013, just 110,000 homes were completed.
The report outlines four steps which the government can implement to address the housing supply issue:
Development should be planned nationally
According to the report, Britain is the only developed economy to have absolutely no planning for homes beyond localised levels. The recommendation is for councils to be encouraged to plan housing developments together alongside other infrastructural improvements to support the growing population.
Local enterprise partnerships should be encouraged
More communication with local enterprise partnerships is required in order to accurately assess housing needs across the wider economic region. This would ensure that 'variables' such as those who live in one authority but work in another are included in such an assessment and their needs are considered by both councils.
Introduce zones for new homes
Land needs to be urgently released for development, providing those who want to build high-quality homes quickly with the means to do so. The report identifies planning authorities as potentially having the power to create 'new homes zones' as areas where significant numbers of new homes could be developed.
Small construction companies to be incentivised
Britain's major homebuilders are unable to fill the supply shortage, building an average of 130,000 houses each year. The Guardian/Shelter report suggests mobilising an army of small companies to bridge the supply gap. However, small companies need access to cheap finance and the government would have to consider a 'Help to Build' scheme similar to the 'Help to Buy' scheme to give additional stimulus to the sector.
The recommendations would appear to make complete sense but whether the government takes any notice before the general election in 2015 remains to be seen.
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*This page is provided for information purposes only and should not be construed as offering advice. IPIN is not licensed to give financial advice and all information provided by IPIN regarding real estate should never be treated as specific advice or regulations. This is standard practice with property investment companies as the purchase of property as an investment is not regulated by the UK or other Financial Services Authorities.