Why Are UK House Prices So High? Developers Have Failed to Build New Homes
https://www.bloomberg.com/graphics/2024-uk-housing-crisis/
Posted by bloomberg
Why Are UK House Prices So High? Developers Have Failed to Build New Homes
https://www.bloomberg.com/graphics/2024-uk-housing-crisis/
Posted by bloomberg
48 Comments
*From Bloomberg reporters Eamon Farhat, Tom Rees, Olivia Konotey-Ahulu and Kyle Kim:*
Britain’s housing crisis has become so acute that the next government will need to build the equivalent of another city the size of London to make up for five decades of below-target construction, analysis of official data shows.
Ahead of a general election in which property has become a key issue, a Bloomberg analysis of new-home completions shows that in some parts of the UK just one place was built for every 10 extra people in the population from 2011 to 2021. That shortfall is the main factor driving the country’s worst housing crisis since World War II.
For almost five decades, developers and local authorities have failed to deliver homes at the pace of other wealthy nations in Europe — or even at the rate Britain did through the 1960s. Younger voters in particular are angry that the pandemic and 14 years of Conservative government have only worsened the problem.
The “Affordable” New Builds in my area start at £350.000……
It’s utterly absurd.
Ultimately it comes down to supply and demand. The UK population is huge considering the land mass in comparison to other countries.
When you import hundreds of thousands of people is there any wonder that housing stock doesn’t meet the demand?
Something, something, supply and demand… Doesn’t matter in the slightest how many new homes you build if you’re just going to flood the country even faster!
More dangerous that people coming in boats (how they will afford 400k if they come with nothing ), or builders not building enough. More dangerous than them are the investors. Companies like BlackRock. Rich people from other countries buying houses as investment. That’s the problem .
Feature not a bug, people who own a lot of property want their investments to go up in value, not down.
This means they want it as difficult as possible for developers to build new homes. Which has been entirely successful.
As a company, if you can make your product for peanuts and sell it for a fortune, you do it. And you don’t flood the market or you won’t be able to sell for a fortune any more.
Close but no cigar… There have been many studies why. In no particular order:
– lack of skilled trades,
– insufficient volume of materials,
– planning system that inhibits accurate /reliable forecasting of land ready to develop.
– Under funding of local authorities (planning and elsewhere)
– insufficient new infrastructure to support new houses (water, sewage,roads, to schools & hospitals)
– the over sized land banks held by developers, and almost totally sub contracted work force are both causes of and effects too.
Developers aren’t passive victims in all this, they could do more… But they’re businesses not social enterprises.
Every government since Thatcher has known about the problem, promised to do “something”, and really not made much difference.
Apart from the building of homes, the economics have changed substantially for the worse. Low interest rates fueled massive price increases. ’08 financial crash /austerity/Brexit/COVID made the poor and middle class poorer. The unlimited printing of $ by the USA to deal with COVID has led to global inflation, and made everyone poorer.
Last but not least, the demand (population) has gone up too. _Legal_ migration was 750k/year for the last two years, and had been running 300-400k/year for the last decade. That’s a new city every year.
It’s not just a failure to build new homes – although that is clearly a problem.
It’s rampant speculation in the property market in every corner. Housing has been fully financialised – it’s not primarily a place to live, it’s primarily an investment.
It’s older people hanging on in big homes when their family leaves and nothing incentivising them to move to a smaller place.
It’s BTL mortgages allowing people with limited capital to become amateur landlords and stop FTBs getting those properties.
It’s thirty years of right to buy and very little social housing being built since against the background of a growing population.
Its ludicrous planning regulations that stop building almost everywhere – except evidently flood plains.
Those utter *bastards*. Lounging about when they should be *developing*.
And every new build is a 4-5 bedroom house for £400k in the middle of a crappy estate.
We need high rises with a mix of 1-3 bedrooms. I’m literally never going to be able to own anything as a single person.
Supply and demand. Too many people entering the country for house building to keep up.
This is an insanely complex issue and it’s super easy to be (dangerously) black and white:
Everything from the cost of materials, to drops in trade apprenticeships to immigration to cost of living to people living longer etc etc etc has contributed.
IMO, we need to find a way to build STARTER FLATS (like they do in Europe). They are quicker and cheaper to build and buy, and can be built in inner cities. They also help address the first time buyer space which desperately needs attention.
But they are building houses… every field near me is being paved over as we speak!
In 2019 we bought a bit of land. It took 2 years to get planning because a single councillor happened to have a personal dislike of the original vendor. There was no valid reason for an objection, as the council themselves told us. In that two years, material costs skyrocketed and the development was no longer viable in original form. Build cost went from 800k to 2m. The land is still bare land today, so thats another 10 houses the country doesnt have yet.
On another application recently, despite chasing, an email I sent to planners in December was responded to in May.
As far as I am concerned, the problem is the planning system and far too much power resting in the hands of local councils with planning staff who only work a couple of days a week. It results in delays that can bankrupt firms involved. The planners also have far too much control over the end designs, but arent educated in design, so thats why most of these new estates look like crap.
People love to blame developers, but really the public ire should be directed at planners. Sadly it isnt, as most folk dont come into contact with the system. Ask a builder, architect or anyone involved in regularly making planning applications about it and youll hear some surprising stories.
Everybody wants to sell their home for a profit and to maximise their return, they don’t want the same as they paid after time has passed and certainly not a loss, so exisiting-home prices will only keep going up and its these that are a reference for pricing new builds
The major house builders are in a cartel with financial institutions to control the pipeline of new housing in the U.K. and this is done because our entire economy is built on a house of cards which dramatic rises and falls in the housing market could destroy.
We didn’t build it this way but inevitably we will be the ones who suffer and pay for it. The quality is awful, the prices are unaffordable, the banks are more cautious and fee hungry than ever and real wages haven’t changed in a decade whilst the cost of living has pretty much doubled.
I’m in my early 30s and pre-kids but honestly? I don’t know whether I’ll be able to ever afford to pay the £1k a month per child for childcare, the babysitting costs, the expenses they run up just being kids… why is my career more important than my wife? Which one of us takes the financial and career hit to stay home and look after kids? Is it fair to make one partner pay for everything and then pay you a salary so you’re not losing out? These are real concerns that real people are having right now.
These issues (if they ever get fixed) are going to take at least a generation to correct. My plan is to leave the U.K. as soon as possible and start my family in a country that treats people better and has a safer future for my family. I’m a citizen so I can always come back when it’s better but I think anyone born since 1990 has paid enough already…
Millions of extra people and foreign passport holders being allowed to buy land / property can’t help matters. In most countries foreigners can’t bug land, where I live (Thailand) foreigners can only buy condos and that’s only if 51 percent of the units are Thai owned, it works for them, as does their non nonsense immigration system, overstay ur visa or commit a crime then off to prison for you until u have served ur sentence and can pay for a flight home.
They haven’t failed to build new homes, they’ve successfully restricted the rate of their construction to maximise their profits by creating an artificial shortage. Hence why they will buy land and sit on it for years even decades with full approval to start construction.
The entire industry needs reform and tighter regulations. For anyone that thinks otherwise these developers don’t care about high quality housing or housing estates they will only do the bare minimum legal requirement for them.
>Why is my bath overflowing? *Because my plumber didn’t install a bigger bath.*
vs.
>Why is my bath overflowing? *Because I turned the taps on and left them on.*
Demand is the problem, slow build rates come after, not before.
Demand comes from population increases, immigration, internal migration and investors.
Building more will not solve anything so long as those demand sources are constant, or are increasing, as is the case for England.
Developers just arent taking up the governments 30% scheme for first time buyers that buy new builds.
It’s impossible to find one that fits into the scheme here in Oxfordshire.
The scheme is meant to encourage people to buy new builds to encourage development, but it doesn’t seem to be working because the developers aren’t using it.
We should be swamped in cheaper attainable housing for all, instead it’s drip-fed and sold at a premium.
There are many layers to this problem that ‘should’ or ‘could’ be solved rather simply but never will because it means someone who paid a lot of money ~~bribing~~ lobbying their way into influencing decision making is going to be out of pocket.
Can we also talk about how dogs hit the quality of most new builds is? We live in one at the moment and there are probably (and this is no exaggeration) over 500 snagging issues.
Yes, I’m sure there are no other factors making the problem considerably worse. Nothing to look at here we’ve got the issue completely worked out.
Not building enough houses, and people are apprehensive to buy flats to live in due to leasehold
What remains of nineteenth century terraces and the majority of twentieth century council houses are usually so much better than your FTB’s box-like new build. For 300k or more, they want to give you a ground floor with a small kitchen and a living room and a first floor with two small double bedrooms and a very small shared bathroom. There’s no separate dining area and hardly any storage room. There’s no front garden and barely any driveway, and the back garden is perhaps large enough to swing a cat. What developers churn out at the momemt being objectively worse than much 20th C social housing stock (excluding towerblocks) is a fucking disgrace. The estates themselves are often ugly as sin, as well.
Have just come back to the UK for a visit. The amount of NIMBY signs I’ve seen is ridiculous. It’s not just the developers fault, especially if they can’t build in the first place.
There should be criteria for builds and if met it is auto approved. None of this approval BS which delays stuff and adds to the cost.
Would I *like* somewhere with a garage, built sustainably with solar and all the mod-cons you’d like to think are “standard” on any new home? Sure.
However knowing the base price of most new homes, my bank won’t give me even half of what they want for it – unless I have someone else pitching in which still brings it to roughly 2/3 of what is needed.
Either I need to establish my own tribe or something so we can all get houses by pooling resources, or I would legitimately have been better off having a damn Caravan and living at a campsite.
Not enough starter homes. Not everyone wants a flat.
OP why did you make up a title that’s completely irrelevant to the news article?
Real title::
# UK’s Housing Crisis Needs a London-Sized City to Fix It
Developers and local authorities have failed to keep up with population growth and the pace of building across Europe.
Developers have no interest in meeting demand.
I’ve had projects stop half way through to wait for prices to rise. Poured concrete into a hole to preserve planning while they sit on it for years.
It’s a racket, and it’s pure capitalism.
The UK only builds 200k properties every year.
But the Tories allow in 1.2 million immigrants per year (last year).
Unless we somehow 6x the production then prices will rise. (which is a key reason the UK’s civil service always pushes for more migration)
I think they’re trying to justify London house prices, which wouldn’t be so high without dirty Russian/Chinese/Arab money
Our economy is propped up by 3rd world contractors making hand over fist, raping their own lands, and investing here with blood money, because they have no institutions
It’s intentional to keep property prices up and therefore profits up
Its on successive governments surely. This is decades in the making.
You have the large portion of burden for homebuilding on developers.
They aren’t doing it out of the goodness of their heart, they are businesses with profit margins and shareholders to satisfy.. how the hell did people think it would turn out exactly.
Actually there are more than a quarter of a million empty homes. They’re expensive because people hoard homes
It is my British values to import a million people every year to keep house prices high and wages depressed 🙂
Wait a minute. I thought mass importing 3rd worlders was good for the economy. Surely they can help us build all the houses we need!
Because the government WANT house prices to rise.
It is that simple. Labour and Tories want prices to rise every year. It’s planned.
It is absurd to expect private property developers to solve the public housing crisis.
It’s not just the UK. Much of the USA, Europe and Australia have high house prices.
Everyone has failed to build new homes in the UK, for decades. This is especially the case with social housing which was largely privatised and not replaced in the 80s.
Ad to this that we are a ridiculously South East centric country which has created a massive need for housing there and a shortage of decent jobs outside that area.
I mean the whole not building thing is interesting because in my area there’s not end of new build estates cropping up around me (northamptonshire). The biggest issue seems to be affordability – the average starting price is 320k give or take. The new build we brought in 2020 has appreciated by 70k.
House prices are simply out of control. The issue isn’t necessarily the lack of buildings, but it’s the lack of affordable houses being built.
Developers haven’t failed, they want to!
Councils keep rejecting planning permissions because pensioners put pressure on them to not build affordable housing.
Planner here and a huge issue is just general government policy.
Most people complain that houses are being built without infrastructure, but the only way to stop ‘tacking on’ to Victorian sewers and existing roads is to build new settlements or beyond the existing built form.
But then you propose to build anywhere in the countryside or expand existing, smaller settlements and everyone flips their shit.
Reality is, we don’t build enough homes for a variety of reasons. People are one of these reasons.
The sort of one and two bed starter homes that first time buyers used to look for have all been snagged by BTL landlords and are being rented to those same prospective buyers.
They’re not building one and two bed starter homes because they’re not economical for the developers.
So “building new homes” just results in more and more five beds that inevitably cost more than they should.
Bloomberg charges money for that kind of observation?
The increasing conversation about NIMBYism is interesting.
In the past, everyone in charge of councils, cities, counties and MPs was a NIMBY, so no one ever accused anyone else of being a NIMBY.
Now you’re beginning to see anti-housing officials finally being called what they are, and it makes a difference.