New builds will fail to meet demand

Help to Buy and an improving economy have helped to boost confidence in the housing market. New builds are seeing an increase, with 54,700 starts in the first six months of 2013. This is an increase of 31 percent from the same period in 2012.

Savills are predicting the increase of new builds in the private sector will continue through 2014 and beyond. They predict that construction rates will increase by 8% a year over the next five years, bringing the number of properties built by private house builders to 107,000 in 2018. 

However, this improving outlook compares to a historic high of 203,320, back in 1968 and a more recent 2007 peak of 154,210.

It will therefore be down to the political whims of Government to meet what is only expected to be a further shortfall of supply. Savills are predicting an increase in output from the public sector. They are forecasting growth in the number of homes delivered by local authorities,  from 1,665 this year to 10,000 in 2018, and increased delivery from housing associations from 26,000 new homes in 2014 to 34,000 in 2015.

Overall, Savills predict that the UK will see119,000 new build completions in 2014, rising to 167,000 by 2018. A figure that is still way short of the 240,000 new properties that the country is expected to need to keep up with housing demand.

In terms of supply alone, landlords can expect to see continued upward pressure on both property prices and rents.

Obviously other factors may play their part.

Download the full Savills report here