The latest property research gives clues to increase sales
Housing shortfall is higher than previously estimated. Demand for rental properties is growing rapidly. And foreign investors are snapping up residential property in the UK. Recent research shows where property developers should focus to increase their sales.
The UK needs 340,000 new homes every year
Recent research conducted for the National Housing Federation and homeless charity Crisis suggests that the government’s target of 300,000 new homes each year by the mid-2020s is woefully short of demand. And not by just a fraction, but 4 million homes through to 2031. The report concludes that the UK needs to build 340,000 new homes every year for the next 13 years to get to equilibrium between supply and demand.
Where does the demand for housing come from?
While there has been concern about Brexit sucking some demand from the UK housing market, we’ve continued to sell off-plan property post the Brexit vote. We’ve long held the view that demand for homes in the UK is a beast that cannot be slain but will simply grow. Yes, ‘despite Brexit’. Why? Because demand isn’t simply from EU immigrants. The research from Heriot-Watt University comes to the same conclusion. Demand for new homes in the UK includes from:
- Those who want to buy but can’t afford to
- Young people moving out of their parental homes
- Couples who want to have children
- Homeless people
This is organic demand growth that has been largely overlooked by those predicting doom and gloom post-Brexit.
The need for affordable housing is underestimated, too
The report also provides an estimate of affordable homes that are almost double current estimates: 145,000 against 78,000. This is 42% of forecast housing need, as opposed to the 23% that were built in 2016/17.
Expect a million more renters by 2025 Hamptons International expects the demand in the private rented sector to explode in the next seven years. It predicts that there will be six million households renting by 2025.
Research from UK Finance shows that around 16% of landlords acquire their property without purchasing it. Common sources include via inheritance, couples moving in together, relocating, or keeping a home for investment instead of selling. Given this number, 84% of landlords are property investors.
With more than one million extra households renting by 2025, there could be 800,000+ properties bought by landlords over the next few years – more than 100,000 every 12 months.
To sell your off-plan property, supply the demand
It’s clear that property developers have the opportunity to sell a lot of property to investors. Yet if you read the news headlines, you’d be forgiven for thinking that UK investors are shunning the market. But investors are a canny bunch.
Certainly, the tax changes made on buy-to-let investment have dented some demand from individual investors in the UK. This said, what we’re experiencing is many more investors incorporating to buy property. Individual property investor numbers have fallen, but company investor numbers have increased. However, there is also another source of off-plan investment. Foreign property investors demand new build property as buy-to-let opportunities.
Buying from international investors surges
Hamptons International said that 30% of homes across London were sold to international buyers last year. That’s a big proportion, especially in a post-Brexit market in which confidence was supposed to collapse. What we’re noticing is even more marked. And we’re not the only ones.
Shojin Property Partners have recently reported a 52% surge in the numbers of overseas property investors buying into crowdfunded development projects. They are attracted by high yields, growing demand, and the long-term attractiveness of the UK economy as an investment destination. Further, the weak pound makes their money go a lot further.
Where do the foreign investors come from?
Much of the foreign investment demand for crowdfunded opportunities originate from the Far East, Middle East, and East Africa. Hamptons has seen homes in prime London locations particularly sought after by Middle Eastern buyers.
Perhaps savvy property developers should be targeting foreign investors from these geographies to boost their off-plan sales?
To connect your development with waiting foreign investors, ready to buy today, all you need to do is contact Castlereach. Then let us do the rest.
Call us today on 0207 923 5680.
Live with passion
Brett Alegre-Wood