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Housing shortage to fuel UK property price growth
Date:-26-Aug-2011
Housing shortage to fuel UK property price growth
UK home prices are expected to be worth over $41,000 (€29,000/£25,000) higher by 2015, on average, than their current levels, a new report from the Centre for Economic and Business Research (CEBR) shows.
Residential property prices are expected to fall marginally this year but bounce back strongly by 2015 due mainly to a shortage of new build homes.
The research by CEBR suggests that the property market will make a recovery over the next two years with prices expected to reach a record high by 2015.
The current average value of a home in the UK is $290,000 (€202,000/£176,000), but the CEBR estimates that this figure will appreciate to over $330,000 (€230,000/£200,000) by 2015, which would exceed prices recorded during the last peak in 2007, when the average UK home was worth $314,000 (€219,000/£191,000).
The CEBR believe that around 225,000 new homes need to be built each year to cater for existing domestic and international demand, but it estimates that only 110,000 new homes will actually be constructed.
The latest figures released by the British government show that housing starts in the second quarter of this year fell by 9% to 23,400 compared with the previous quarter. The volume of new homes completed also dropped by 4% to 29,020.
The number of new homes being built is less than half the level recorded before the last recession, with a total of 98,300 housing starts recorded in the past 12 months, down 2% year-on-year, while housing completions also fell 4% to 107,220 compared to the previous year.
Recent government data shows that house builders are developing around 25,000 new homes each quarter - equating to approximately 100,000 new homes each year. This is nowhere near the level required, with the lack of new homes already pushing property prices and rents higher across some parts of the country.
