Residential real estate market of UK is far from satisfying demand for new homes

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Residential real estate market of UK is far from satisfying demand for new homes

November 16, 2018 - 15:24
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Investors that are concerned about UK’s residential real estate market crash due to Brexit failures have to remember about one simple fact: the market is far from satisfying demand for new homes, Bloomberg reports.

Photo © Alina Kuptsova, CC0 1.0

Investors that are concerned about UK’s residential real estate market crash due to Brexit failures have to remember about one simple fact: the market is far from satisfying demand for new homes, Bloomberg reports.

Despite of significant decline in homebuilders’ shares on Thursday, which showed that they are not protected from economic turmoil, data issued the same day can appear to be more important. It showed that construction volumes are far from the targets set by the government. It means that inability to satisfy demand will support the market.

On Friday construction companies’ stocks continued falling after three largest participants of the market, Persimmon Plc, Taylor Wimpey Plc and Barrett Developments Plc, lost more than 7% of its value on Thursday.

Limited access to land, growing construction costs and slow planning process restricted volume of real estate units that builders supplied to the market in last decade. To solve this problem, last year the government set the goal for building 300000 houses. However, this goal will unlikely be achieved.

The worst situation can be observed in London, where number of new homes fell by 20% compared with the last year to 31723 units.

In last decade price in the capital grew by almost two thirds. Average cost of rent is 1619, while for the rest of the country it is 798 pounds.