With mortgage markets reinvigorated, this year will see everyone’s attention turn to supply in the housing sector.
The government’s Help to Buy and Funding for Lending schemes, which lowered deposit requirements and mortgage rates, have proved successful, with private housebuilding on the rise.
The Construction Products Association predicts a 10 per cent growth in private housing starts for 2014, compared with 9 per cent for 2013, though caution remains as forecasters stress this growth must continue post-2014 to address the UK’s housing crisis.
Fears that the market could overheat and create a housing bubble continue to simmer. The Bank of England has made changes to the Funding for Lending scheme in an effort to tackle this, which will come into full force later this year.
Where Funding for Lending money was once available for household lending through mortgages and other loans, it will now be aimed at business lending.
“Capital for smaller schemes remains constrained, with SMEs in the sector finding it difficult to secure growth funding”
What happens once Help to Buy finishes at the end of March 2016 or sooner will also be a concern this year, with many fearing that building rates could suffer without the government incentive.
Supply constraints such as skills and materials shortages will continue long into 2014, as housebuilders respond to rising demand. But strong cross-party political support has the potential to boost investment in housing.
Private funding boost
Six UK insurers have said housing is part of their expected £5bn investment in UK infrastructure this year.
The chancellor also pledged £1bn in the autumn statement towards schemes across the UK that will help to unlock stalled housing sites.
Capital for smaller schemes remains constrained, however, with SMEs in the sector finding it difficult to secure growth funding, according to KPMG.
It expects an emphasis on local authority-backed urban regeneration – including units specifically built for rent as well as sale, along with improved affordable housing and amenities during 2014.
The mayor of London’s Housing Covenant programme 2015-18 will see £138m spent to deliver 6,000 affordable homes by 2018. The deadline for bids for the scheme is 10 March 2014, with resulting announcements scheduled for June or July.
Watch out for:
- Battersea Power Station £8bn site, which will deliver 3,500 new homes. The scheme will be moving forward in 2014, with the reconstruction of the chimneys getting under way in the first quarter of 2014.
- Capital and Counties’ £8bn Earls Court development, set to deliver 7,500 new homes. The client will be holding an exhibition on proposed designs for the scheme’s North End Village in spring 2014.
- The Brent Cross & Cricklewood £4bn development, also comprising 7,500 new homes, has submitted a section 73 application to make three improvements to its initial plans, which were approved by Barnet Council and the mayor of London in 2010.
- Both the mayor’s Royal Albert Dock and Silvertown Quays projects, collectively worth more than £1bn, will be submitting for planning in the spring.