Temporary convergence or fundamental shift: new ways to buy new homes (part I)
Writing for The Guardian, Larry Elliott reminds us where things stand: ‘A crisis has been brewing for decades – and left unattended the problem can only get worse. Britain has a rising population and the trend is for smaller households, both of which mean demand for housing will keep on rising.’
The industry’s response to the challenge and to the government’s oft-cited target of 300,000 new homes a year is more varied than you may think. Leaving aside the important question of the achievability of those numbers for a minute, it’s instructive to survey what housing options are out there. (In part II we think about their impact.)
In several ways the market is responding by evolving quickly. Those in the business are looking for new ways to appeal to homebuyers.
New options for homebuyers
Buyers have more choice than they did a decade ago. A wide and sometimes unexpected new range of organisations and schemes may sit behind that property you have your eye on. Gone are the days when privately owned or FTSE-listed builder/developers were the only show in town.
To be sure, house builders, the sector’s main contributor of new homes, are a mainstay, with many helping to increase local housing association stock. Meanwhile, in response to less public funding, an increasing number of housing associations have set up commercial subsidiaries in order to deliver private sales themselves.
We now also see building contractors, working independently or in joint ventures, investing their own capital into land in the hopes of obtaining healthier financial returns, and local authorities are joining forces with them to share profit and meet their housing targets.
When commercial developers get involved by creating mixed-use residential and retail/working spaces, the results can be nicely creative. The Smithfield project in Manchester employed different architectural teams for each phase, breathing life into the built environment.
Homes on both sides of the tracks
Even transport companies are getting in on the act. There is the land the train tracks are on, and then there is adjacent land that is valuable but often goes undeveloped. This thinking has something in common with that of retailers who are transforming the spaces above their premises into flats.
We’re also seeing financial institutions create house building companies, and landowners (brownfield or greenfield) putting their heads together with land-trading outfits to share development risk and rewards. And overseas investor-developers are securing sites for developing and selling new homes, sometimes as part of a joint venture.
Finally, housing cooperatives and community groups are investigating self-building to keep costs low.
A diversity of supply
All of this activity is creating new opportunities for buyers and boosting the housing market with fresh schemes and alternative offerings. Join us in part II to review the effects on pricing, risk and the housing crisis in general.
