Radio 4 just now. A Barratt's Home exectutive on why they are now building family homes instead of starter homes:
"We've found that house prices are so high that first timers are having to save up £40,000 deposits. Median wage earners can expect to have to wait until they are aged 37 to buy their own house."
[We need to move into an active market - in other words.]
Yes. Clearly. There are so many stranded would-be buyers that it means boon time for landlords and that rents are going up at a rate of 7% pa - accommodation costs are making it near impossible for people on average earnings to save money into bank accounts. Yet Mr Barratt's tells us that times are not particularly hard for first-timers in terms of financing and affordability. (My parents bought their first family house aged 26 on one low wage. Who's Mr Barratt's kidding ?)
Our Barratt's exec was asked if there really was a housing crisis and if house prices were being kept up artificially.
"Oh no." he said defensively "There is a need to build 200 thousand more homes per year such is the demand for housing."
Why are Barratt's going into family housing now ? Are they doing this because they are getting cuddly-wuddly about families ?
Don't be silly.
It's because they appeal to older people who have the money for deposits from the equity of their first houses.
Clearly it's because they can't shift starter homes at the high prices that they want to. There is a real fear that those new builds would remain empty - because people can't save the deposits needed to buy them at such inflated prices. Those within the target market are finding these houses unaffordable despite record low interest rates and record demand from people wishing to own houses. So - instead of dropping prices and building them at affordable prices - Barratt's are pulling out of the market.
Good business. I don't blame them. But a housing crisis ?
3 comments:
I fear you are right E-K. But look where these new developments are, normally out on the fringes, miles from anywhere with a clump of 'social housing' thrown in as part of the deal and I'm not being a snob here but these invariably get filled up with the usual suspects who do their own landscaping with broken vans, fridges and kids bikes on the small grassy areas, so on top of all this loveliness the young couple then have to find the ever rising travel costs to get into where they work!
Bollocks!
Barratts aren't as bad as they're made out to be. They build like any other volume housebuilder. They have the clout to take on planning regs, which make ridiculous demands on smaller developers, who just do not have the financial resources to counteract the spitting idiots in council planning offices.
The requirements for percentages of 'affordable' houses have long been a barrier to sensible development, and why should Barratts or anyone else just kow tow to the dreadful councils like Tower Hamlets?
I have an offer for buying a development for affordable houses on my desk now. It means that there is absolutely no profit on the build and sale of these to the RSL, and the only reason why the developers are considering it, is because that way, the planners will get their 24 flats, and let the development make profit on something which could make money, like retail and a hotel.
Ranter - I'm no fan of starter homes either though. I kind of think that they have detracted from the fact that we should have been building more family homes and retirement complexes to rebalance the market.
Scrobs - I remember Wates undertaking 'loss leaders' and the developers themselves building office blocks - which remained empty for decades - for tax purposes.
It's madness but the biggest thing causing us problems is 2.5m net immigration over 15 years.
How can this not have caused a housing crisis ?
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