UK house prices: No respite in sight for the housing market

 
Chris Papadopoullos
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City level house prices are seeing their fastest growth for over a decade
The housing market shows no sign of easing up this summer with prices climbing and mortgage lending seeing its strongest month for seven years.
City level house prices are seeing their fastest growth for over a decade, property market analysts Hometrack said today. It said asking prices had increased 4.3 per cent in the three months to July.
“Low mortgage rates, economic growth and rising earnings will continue to stimulate demand and put an upward pressure on prices,” said Hometrack director of research Richard Donnell.
London prices were up 9.4 per cent from May to July compared with the same period last year, Hometrack said.
It chimed with the results of a survey from estate agent Knight Frank, which said this morning that more households believed their properties were going up in value.
Its house price sentiment index rose to a score of 59.5 for August from July’s 58.6, further above the 50 no-change mark. Mortgage lending saw its most buoyant month since 2008, with £22bn loaned in July, according to figures released by the Council for Mortgage Lenders (CML) yesterday.
“We expect lending activity in the rest of the year to be underpinned by improving economic fundamentals, but kept in check as any upward pressure on house prices further stretches affordability for some buyers,” said CML economist Mohammad Jamei.
Falling affordability in the housing market is having a knock-on effect on renters.
Rents have shot to record highs at record pace across England and Wales, estate agents Reeds Rains and Your Move said today. Average rent was £804 in July, up from £753 in the same month last year.
“We’re faced with a real problem – homes have become a scarce commodity,” said Adrian Gill, director of Reeds Rains and Your Move.
“As house prices and mortgage deposits continue to eat up a larger and larger proportion of wages, appetite for rental properties has begun to outstrip the available stock.”
Britain needs more homes, here is how it can get them

GARDEN CITIES

The new towns and garden cities of the 19th and 20th centuries were major achievements for housing supply in England, leading to the construction of hundreds of thousands of new homes as well as businesses, green spaces and community infrastructure. More than 1.4m people now live in the postwar new towns like Stevenage and Milton Keynes.” Shelter

CHANGE THE PLANNING RULES

We’re not yet seeing a breakthrough in housebuilding starts, which underlines the need for the government to push ahead with further reforms to speed up the planning process.” Greg Hill, strategy and change management director at Hill, a housing developer

ROLL BACK THE GREEN BELT

“The only realistic way to build enough houses to meet demand is to allow building on the green belt, brownfield sites are insufficient in number and far too expensive to build on. As a first step we should remove green belt designation from any intensive agricultural land within 10 minutes walk of a commuter train station—this would give us space for about 1m homes. Eventually we should remove green belt protection from any land not genuinely valuable—most is not the bucolic idyll we imagine.” Ben Southwood, head of research at the Adam Smith Institute

SOLVE THE SKILLS SHORTAGE:

“We need to make it clear to young people that construction is not an inferior career choice to those that are perhaps mentioned more frequently in the classroom – it’s an exciting, challenging and rewarding industry for all levels of academic ability.”
Alan Muse, global director of built environment professional groups at the Royal Institution of Chartered Surveyors The Rics predicts 27,000 building projects a year will be at risk by 2019 unless a new generation of skilled workers joins the construction industry.

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