Gavin Eustace, Head of Residential Development at Octopus Property, counters Brexit gloom with a look at the potential in the UK housing market, particularly in the regions.
With the Government preoccupied with the ongoing Brexit discussions with the European Union, the housing shortage in the UK is becoming a bigger and bigger problem.
It is a direct result of the chronic shortage of good quality housing being delivered to meet the growing demand and shifting demographics in the UK.
The government’s continued inaction on the housing issue has led to the significant rise in house prices and rents in London leading to the exodus of young families and professionals from the capital to the regions.
This trend was reflected upon in contributions from participants at a recent Octopus Property debate, `London versus the Regions in the Brexit era’, the majority of whom were residential developers.
Changing transport links have had a big impact on the housing landscape
For example, towns in the South East including Reading, Slough and Windsor will benefit from the increased connectivity and ease of access to London through Crossrail, while cities in the midlands such as Birmingham will be strengthened by the HS2 high-speed rail line.
These developments in transport infrastructure are so significant that Birmingham is not only an economic hot spot in its own right but can also claim to now be within the London commuter belt with a travel time of 1hr 25.
Culture and industry are driving consumer interest
Birmingham has benefitted from a fast-growing local economy as well as large-scale city centre regeneration which is helping fuel population growth. Those familiar with the recent regeneration successes in the UK will easily spot how Birmingham is following in the footsteps of Manchester in providing the combination of affordability, accessibility and interest that consumers seek.
Similarly, other hubs of culture and industry including Bristol, Leeds, Bradford, Farnborough, Woking and Edinburgh are all highly attractive to consumers who are looking for the perfect blend of affordability, connectivity and accessibility.
Property investors are turning to the regions
Next, the debate was informed by Savills research which highlighted that projected five-year growth for house prices was becoming less London-centric with the northwest leading the regions while London is now ranked last. (Source: Savills, Oxford Economics, 2018)
Confidence is key to the success of any market, and this is certainly true of housing, where property values are so closely correlated with consumer confidence. Within housing, and whatever the newspaper headlines, the industry can be justified in having confidence.
Despite the current trends, London will always have its place at the pinnacle of the UK housing market. With concerns on whether properties will easily be sold in the regional markets, many will continue to favour the capital.
Investors, brokers and lenders need to work together
At this point, all those involved in UK housing, from lenders to developers to legislators, can work to protect what is a well-established marketplace.
By working together, we can ensure the UK housing market remains on course. Octopus Property is committed to lending to borrowers throughout the market. We look forward to continuing to do so.
With access to a range of institutional and retail funds which enable us to deploy many hundreds of millions of pounds every year, we know that we have an important role to play in providing support to brokers and borrowers. It’s a role we have undertaken for the last ten years as a specialist residential lender, along with financing commercial and developmental projects.
(c) Octopus Property