According to a survey by the National Audit Office, the difference between supply and demand in the UK housing market is likely to get wider by the time we reach 2020 with house building currently falling short by 66,000 new homes per year.
The survey published on 20th January represents clear evidence that the government is almost guaranteed to not only fail to reach the number of house required but it is also in danger of missing its own target of a million new homes by 2020.
The government pumped £28 billion into housing in England alone in 2015-16, although more than two thirds of this went into housing benefit.
Government’s Housing Target Looks Like A Pipe Dream
The statistics make it clear that the government’s aim to increase home ownership and the supply of homes has become little more than a pipe dream. This will hardly be great news for first time buyers who continue to stand by powerless as the price of houses continues to outpace wages.
This also has the effect of pushing more would-be house buyers into rented accommodation where they are forced to pay a high proportion of income on household expenses.
What’s bad news for those yet to climb on the property ladder is good news for buy to let investors who have certainly been unfairly hit by tax hikes.
The decision to make life more difficult for buy to let investors could turn out to be a mistake when investment from private landlords could so easily lessen the housing shortage.
UK Needs to Provide Houses for 227, 000 New Households Per Year
According to NAO projections, and estimated 227,000 new households a year will be formed between 2011 and 2021. The government has committed itself to delivering 174,000 per annum until 2020 and this includes converted properties, something buy to let investors have been doing successfully for years.
The number of people with mortgages spending at least a quarter of their disposable income on housing has fallen from 40% to 19%. This means those people who have already invested with a mortgage are likely to see their equity grow substantially in the coming years as the amount of disposable income rises.
For property investors at least, the future continues to look bright.