Paresh Raja, CEO, Market Financial Solutions
It will come as no surprise that Brexit dominated much of 2018’s political agenda. And yet, despite the series of high profile resignations and political manoeuvrings, we are still no clearer just what will transpire come March 2019 when the UK is scheduled to leave the European Union.
As someone who works closely with property investors, developers and international clients, it has been reassuring to note that the demand for real estate has not been hindered by the uncertainty surrounding Brexit. Indeed, Nationwide’s House Price Index for November revealed that the average house price has increased by close to 2% in the last 12 months to £214,044. In addition, foreign investors gave this year accounted for a third of all home purchases valued at £1 million or more.
Real estate has clearly not lost its allure, and these latest figures demonstrate that people are still invest in the country’s property market. While demand remains strong, however, the country’s limited housing stock has made the processing of purchasing a home much more competitive.
Addressing the housing crisis
The imbalance between housing supply and demand is one of the biggest challenges facing the UK, and this year, the Government was particularly vocal in its desires to increase the country’s accessibility to residential real estate.
According to current estimates, the Government must provide a minimum of 300,000 new homes a year to effectively satisfy market demand. And while it appears that this target is being heeded with determination – the Prime Minister in September pledged £2 billion in new funding towards the construction of affordable new-builds – it remains to be seen whether this target is attainable.
This year, we also witnessed the appointment of two new Housing Ministers. Dominic Raab MP was
appointed to the role in January 2018 as part of a political reshuffle; however, he was then promoted to Brexit Secretary following the resignation of David Davis MP, which resulted in Kit Malthouse MP being named the new Housing Minister – the 17th person to hold this office in two decades and eighth in as many years. The Government was subsequently criticised by property commentators for its ‘merry-go-round’ of ministers, which has so far undermined the cohesion and clarity of the country’s housing policy.
At this critical juncture, efforts to increase housing supply need to be accompanied by alternative and creative strategies that go beyond the construction of new-build properties. Given the high numbers of derelict properties strewn across the UK, I strongly believe this must begin with encouraging the refurbishment and renovation of unoccupied homes.
Taking advantage of derelict homes in 2019
The number of homes standing empty across the country is staggering – according to government data, more than 216,000 homes have stood empty for six months or more. Yet for the most part, the UK’s approach to the housing crisis has been focused almost entirely on the construction of new-builds. As such, the potential of refurbishing and renovating derelict homes to make them habitable once has been left unexplored.
Rather than allowing huge numbers of properties to stand empty, the Government should instead be encouraging investors to buy run-down properties, refurbish them, and then put them back on the property market – freeing up housing across the market by bringing long-term empty homes back into use.
The benefits of such a strategy are clear, but most importantly there is strong public support for such initiatives. In a recent survey conducted by Market Financial Solutions, a significant 79% of UK adults said they wanted to see the Government focus more on supporting the refurbishment of run-down properties to meet housing demand.
As the property marketcontinues to face significant challenges, we should be exploring creative newapproaches like this that take advantage of the existing housing stock. Theconstruction of new homes is certainly vital if we are to keep up with thegrowing demand, however it would be a missed opportunity should we not alsotake advantage of the houses that already exist on the market. As we look to2019, a holistic strategy is required should the imbalance between housingdemand and supply be effectively corrected.