Factors behind low housing supply
The inability to meet the demand for new properties is being strongly because of the shortage of residential land according to the survey of the largest Housing Society, Halifax. This is also causing an escalation in the property prices.
The most expensive residential land in the UK is in London and South East with cheapest properties in Wales and up North. However, recently prices have been rising faster in the above areas thus narrowing the gap.
Residential land is considered a far better investment as compared to property.
In the long run, shortages in Land supply will mount up resulting in lower supply and escalation in prices.
Planning Permission and Cost of cleaning Brownfield sites
It is also believed that the amount of red tapism involved in getting construction permission to build new homes in the UK is also a major factor behind the low supply. Getting construction permission is such a winding up and difficult process for developers.
The Halifax survey also indicated to the fall in the number of sites sold for residential development. The attention has shifted towards the redevelopment of Brownfield sites within the cities, the cost of cleaning which is very high. There has also been a shortage of these sites which have also resulted in low supply.
Shortage of Labour
There is also a shortage of skilled labour which can result in the lesser properties being constructed within a limited timeframe
Empty Properties
According to figures there are the largest number of empty properties in the north-west especially in Burnley and Liverpool, while areas with large temporary housing needs were also found to have many unutilised homes. Survey by Halifax has shown that there are about half a million empty properties which can be utilised to lessen the low supply problem.
The Empty Homes Agency has urged the housing authorities to take advantage of available empty sites and properties to plan for future. It has also requested residents to report any empty homes in their neighbourhood. If rate of house-building in England continues at the present rate, there would be a shortfall of more than 400,000 homes by 2021.
Solutions and Recommendations
Several solutions can be thought of which can be either demand based or supply- based such as: -
• Lowering interest rates means that large amounts of money can be borrowed for mortgages with moderate monthly repayments. Whilst this increases the ability to repay it boosts demand wile the supply remains fixed.
• The amount of red tapism involved in getting construction permissions should be cut down so that more development contracts can be acquired by builders.
• In order to tackle the housing shortage John Prescott, the deputy Prime Minister suggested the development of affordable homes for teachers and nurses but this is merely a drop in the ocean. There should be more utilisation of brownfield sites.
• The Empty Homes Agency should take more measures to make use of empty properties and encourage building societies to utilize them and put them on the market.
• The skills shortage should be tackled by running training programmes to churn out more labourers to meet the demands and supply.
The present scenario shows a very complex problem of both supply and demand. It would be recommended that the problem of housing cannot be solved by taking just either a demand based or supply based approach. Government will have to work hand in hand with building societies by providing them with more development contracts, passing better policies, etc.
Tags: brownfield sites, housing needs, housing society, planning permission, residential land
