Domestic developers helping alleviate unbalanced levels of supply & demand in UK property market
A severe imbalance between supply and demand has driven house prices to the highest levels in almost two decades. With the government failing to deliver on their target of building 300,000 new homes a year, property expert, Simon Bath, explains that domestic developers could be the key to bringing the housing market back to its glory days. It appears they are already having an impact, with research from Rightmove revealing that there has been a 24% jump in the number of prospective sellers bringing homes to the market, as estate agent appraisals reach the highest level since January.
Brits are becoming increasingly entrepreneurial in their motivations behind being a “homeowner”, not to mention the means with which they are accessing the capital to do so. In order to fund these ambitions, remortgaging to release equity will be key in giving borrowers a boost in capital and ultimately the ability to throw thousands of pounds into a deposit for a second home.
In addition to Rightmove’s research, a unique study commissioned by property concierge platform, Moveable, has found that 1-in-10 homeowners are looking to re-mortgage their home in order to buy a second one – this figure rises to 1-in-5 for millennials – while a further 24% of millennials are looking to buy a home to develop, not to live in. This perfect combination of increased activity and stimulation within the housing market is not only providing existing homeowners with the chance to earn money, but also helping prospective homeowners get on the ladder by increasing levels of stock and reducing prices in the market.
Moveable’s landmark study also highlights a surprising correlation between patterns of remortgaging and property development. In Milton Keynes and London, a respective 22% and 17% of homeowners (all ages) are looking to re-mortgage their home to buy a second property. This comes as both areas show a significant boom in property development, with 22% of developers (all ages) looking to do so in Milton Keynes and London. House prices in Milton Keynes have outstripped UK house price growth by 41.8% (£28,000 per year) in this decade alone, according to Lion Estates. Similarly, the value of a property in the capital is now £24,000 higher than March 2021, according to the ONS, demonstrating a significant increase in value.
“Significant steps have been made this year in an attempt to help first-time buyers with getting onto the property ladder, including the removal of affordability tests, longer mortgage plans and the Right to Buy scheme. However, these schemes still haven’t addressed one crucial factor of such a volatile market – the severe imbalance of supply and demand.
“There’s been a general change of pace around the housing market, meaning that Brits are now looking to property development and buy-to-let as another source of steady income. Ever since the beginning of the 2000s, the housing market has seen an increasing trend in the ownership of more than one home, with people having this objective in mind. Currently, one in ten adults in the UK have wealth from properties additional to their own home, with many of them receiving some form of income through developing and buy-to-let. Houses are way more valuable now than they used to be, and with that comes investment opportunities.
“Because there is currently so little stock, house prices are continuously increasing – making it near impossible for first-time buyers to lock in a property. Promoting domestic housing developers will essentially help to alleviate the current supply chain issues and make it more achievable for first-time buyers to get on the property ladder.”