217: UK massive housing shortage 2010 onwards
08-17-2008
PropertyInvesting.net team
The
Needs: According to our recent research, the amount of households is forecast to increase f
rom 21 to 24 million by 2020. This is because of:
- aging population and more widowers
- more divorced people - living on their own (many of them elderly)
- increasing / expanding population in part from immigration and in part from the aging population
- preference for people to live alone
- more second homes and holiday homes
The reason why we highlight this, is because with level of house building being in 2007 was about 200,000 homes per year, and demolition being 25,000 per year (net 175,000). This is nowhere near enough to cater for the increasing demand - this needs a continuous 200,000 homes a year to keep up.
Building Rates: But in 2008, house building is predicted to crash to some 140,000 (about net 120,000 
homes) because of declining house prices and the credit crunch of Aug 2007 to present. A shortfall of at least 80,000 homes. This is after depressingly low building rates up to 2007 - of range net 120,000 to 160,000 homes a year - mainly small flats. Note - most people want small family houses with small gardens and off street parking. This is rapidly becoming an aspiration of the past for most people in southern
The lack of home building will put further pressure on the already high demand housing areas, particularly in southern
A strategy of buying large terraced houses at low cost in highly populationed central city areas in the south of England, that can then be converted to flats in say 10 years time, is probably a good one. Trying to acquire as much property as possible in 
building up to 5 million home in the right place in the UK - its hard enough to getting planning permission for a home extension never mind about 15 new towns!
So - for those with a long view, as long as inflation does not sky-rocket and oil prices don't climb too high (e.g. over say $150/bbl) we see residential property in southern England in particular being a solid and relatively low risk investment - as long as you buy a bargain. If you want to hedge against the oil price, buy a house or flat in
The only other thing is, we all need something to do in our retirement years, whether this is 3 years or 30 years time - so we can think of worse things than building a nice property portfolio and managing it part-time in my latter years.
Population Growth: The
It's most likely that as the population ages, larger properties will be spilt into flats. The wealthy will buy holiday homes, as they stay wealthy with their investments and financial acumen helping. There will be a massive shortage of small family homes - as builders concentrate on high intensity flat building and affordable homes.
So central small to medium sizes houses with gardens will likely see prices rising. Large but not particularly special homes away from jobs/cities will probably become less desirable. Smaller flats will be in abundance - particularly in the
The most expensive areas of
Summary: So overall, to take advantage of increasing populations and shortages of homes being built - the pointers are to invest in:
- London (West End and where new infra-structure projects are going ahead like Crossrail, East London Line, DHL, Olympics)
- Southern England (preferably coastal areas - St Ives,
- Regenerating southern areas (Gravesend-Ebbsfleet,
