PBR Part 1 - Overall Housing Numbers

Normally a Pre-budget report is about as boring as you can get and contains little if anything of interest to property people. It is the occasion where Gordon Brown tries to hide the fact that his growth projection for the UK economy has halved to 1.75% when America and even some of our European competitors are achieving over 3%. Also his borrowing requirements have mushroomed to £37,000,000,000.

However this time he has also chosen to meddle in John Prescott’s area of responsibility – planning and housing.

In this post I shall concentrate of overall housing numbers.

We have for some time being building far fewer new houses than are required by the market. This includes conversions of existing properties into flats and bedsits. At the moment we are building about 150,000 new houses or flats each year. In some recent years this number has been even lower.

Market demand has been running at around 190,000 houses or flats each year.

The result of the shortfall has been a predictable rise in prices and an increasing problem with affordability.

The Government’s own review by Kate Barker recommended building between 70,000 to 120,000 new properties each year to make up some of the shortfall.

The Government is not going that far but they are proposing the increased figure of 190,000 per year.

I will look at some of their ideas for achieving this in the next post.

Stay tuned to Property Fortunes...