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Residential Development Insights: UK Housing Market Trends 2022

Gain valuable insights into the dynamics shaping the UK housing market in 2022, from limited mortgage finance to the impact on mainstream sources. Explore the shifting perspectives of house builders, the government, and developers. Learn about the evolution of first-time buyer deposits, embrace the rental sector trends and discover the potential of build-to-let as a silver bullet solution. Uncover the challenges and opportunities facing the residential development sector in meeting demand and navigating the changing planning landscape.

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Residential Development Insights: UK Housing Market Trends 2022

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  1. Residential Development Overview Lucian Cook

  2. The UK Housing Market: A living statue? • Mortgage finance is still limited • The economy is still fragile • Base rates are still low • Lenders margins are still high • First time buyer deposits are still prohibitive • The market still favours equity rich areas

  3. Impact on Mainstream Source: Nationwide, HMRC

  4. Forecasts

  5. House builder’s perspective Estimate 2012 Source: DCLG, Reuters

  6. Building into stronger markets Source: Land Registry

  7. Forecasts

  8. The Generation Game

  9. The Generation Game

  10. The Generation Game

  11. The Generation Game

  12. Government perspective 1% extra GDP from building an additional 100,000 homes 45% of the 5 year land supply in strategic sites

  13. The first time buyer • The average deposit for the first time buyer in the UK in 2011 was £26,000. • 5 years ago it was £12,000. • 10 years ago it was £6,300. • The number of ‘private rented’ households in the UK stands at 4.8 million (est). • 5 years ago it was 3.4 million. • 10 years ago it was 2.5 million. Source: CLG, CML

  14. Equity loans 42,000 sales funded with Government funded equity loan

  15. Embracing the rental sector • Private-rented households in the UK to rise by a further 1.1m (23%) over the next five years. • The amount of rent paid by private tenants to rise from £48 billion to £70 billion. • £200 billion needs to be invested in the private rented sector. • We only expect 25% of this will come from ‘buy-to-let’ mortgage finance. • Opportunities for funds & institutions, property companies and private equity. • Linked to contractors, developers & managers.

  16. Build to let - the silver bullet?

  17. Build to let - the silver bullet?

  18. Meeting the requirement Income Yield & IRR requirements Scale & Management Development Viability

  19. Let’s build a rocket boys! • Dedicated rental term allows property to be valued on an investment basis by reference to investors IRR requirements. • A discount to VP allows increased gross and net income yields. • Value sensitive to required IRR and length of user restriction. • That would affect the mix of market, private rented and affordable housing that is financially viable and meets local housing needs. • Neither 100% PRS nor 0% affordable?

  20. A changing planning environment

  21. At a national level Driven by Gradual increase in transactions NewBuy Get Britain Building Growing Places but fewer affordable homes

  22. At a local level Source: Savills using DCLG data

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