The ASC Blog

Focus on Property Development: Why should we support property developers?

Published 12/09/2013 08:30:00

I’m not talking about the big boys who develop the giant multi-million pound office buildings in the city of London, or the big residential developers who develop luxury schemes exclusively for rich foreigners where the square foot price can be in excess of £6,000.

I am really talking about “ordinary people” like you and me. We all read that house prices are rising which seems a little bit odd because the general state of the economy is still weak (albeit slowly improving – or is even “turning a corner” accordingly to the current chancellor).

So why are house prices rising?

The simple answer is that supply is not keeping up with demand. Only 146,000 new homes were built in the last year, which is significantly below the projected figure of 221,000 houses to be built each year. These statistics suggest that Britain has a shortage of houses, and not enough are being built. So we should do everything possible to encourage local builders to focus on providing a better supply. Not only will this help the local economy but it will also help to provide more homes for people to live in, and that will be a positive factor to reduce unwanted house price increases.

There are two main problems. Firstly, there are very few lenders who want to support local builders. The other problem is that land prices can often be too high in relation to the final value of the finished developments. We can deal with the first point by working with banks that are prepared to support local builders. The Government need to actually help more with the second point, by making sure that all unnecessary red tape is removed, which will make it easier for local builders to get planning permission and concentrate on the developments which our economy needs.

What is your opinion?

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