How Is The Construction Shortage Affecting Buyers?

Wesley Davidson, joint director at Fox Davidson, discusses the skills shortage facing the construction industry and how this is contributing to a property price spike.

Demand for housing in the UK has peaked and ministers are seeking to increase UK housebuilding to 200,000 homes a year in the face of chronic shortfalls.

But despite local councils granting planning permission for a record 212,468 homes in 2014-15, there are some 475, 647 homes not yet constructed in the UK.

UK housebuilders say a lack of available land and construction skills shortages are creating barriers to development.

Skills shortage holding housebuilders back

A survey of owners and directors of 389 housebuilders across England by property consultants McBains Cooper revealed 48% increased their output over past year.

However, 34% said they are held back by a lack of available land and 27% blamed a construction skills shortage.

Houses are taking longer to build and these problems are increasing costs and cutting into housebuilders’ margins.

But it is also having a severe impact on first-time property buyers as a shortage of properties drives up prices in the housing market.

Buyers being squeezed out of property market

Sky-high prices are affecting both new buyers and existing buyers who are trapped because they cannot afford somewhere bigger.

Many first-time buyers are turning to the Bank of Mum and Dad to help, with family members helping 300,000 people onto the housing ladder this year.

And it’s not just young buyers; some property buyers in their early 40s have said they have been rejected a mortgage because they are ‘too old’.

The 4.5 million self-employed in the UK can also struggle to get mortgage finance unless they have been in business for years.

Other ways to get onto the property ladder

The good news for those who can get finance is that with base rates now held at 0.5 percent for seven years, mortgage rates have never been lower.

Buyers who are struggling to raise funds and have been refused a mortgage are recommended to use an independent broker to search the market for more flexible lenders.

More than seven out of ten borrowers now use a broker to help them take their first step onto the property ladder.