This article was sponsored by our partners at ZPG.
If you’re investing in land, or deciding what type of housing will appeal most on the site area you’ve acquired you need to understand your local market. Hometrack, a part of ZPG, provide independent residential property insight and data to some of the UK’s largest house builders, so they really know the market.
They’ve used their expertise to outline what will happen to the housing market in 2018 and how you can turn this to your advantage.
Whilst housing sales volumes have remained pretty static over the last 3 years, at around 1.2 million annually, the proportion of first time buyers has been steadily growing.
We expect first time buyers to become the largest group of buyers in 2018 at 35%, overtaking existing homeowners (34%), as purchases by investors decline in the wake of tax changes.
This is good news for housebuilders as according to recent research first time buyers tend to prefer new build properties over resale. Government schemes, the convenience, predictability of costs and the organised buying process are all perceived as big benefits of new homes by this group.
Highlight these factors in your development’s marketing in order to appeal more to the growing proportion of first time buyers.
2018 will see an end to the up and up growth of London’s property prices, as affordability is stretched to its greatest level yet, sales volumes are falling and prices struggle to keep pace with inflation. This will be felt particularly keenly as new builds will see larger nominal price falls.
It’s a different story outside of the South East as affordability is still attractive and large regional cities could see price rises of up to 25% over the next 2 – 3 years.
There’s greater headroom for price inflation outside of the South East, and the majority of new housing currently under construction is in Central England with pockets around Edinburgh and the North East.
If you are operating within the M25 it’s vital that you consider the pricing, product mix and sales rates, not just on the first phase of a development, but over its lifetime.
This is partly due to the extension of Help to Buy, which provides an opportunity for buyers to move up a price bracket. However the price differential isn’t huge between 2 and 3 beds (see graph above), as the demand for 2 bed properties is high from both first time buyers and from downsizers, whose aim is to unlock roughly £100k of equity for retirement.
Make sure you’ve got a view of what’s being constructed in your local area to ensure your mix of housing will appeal and match the demand. It’s important to draw insights from a variety of sources of independent data, to enable you to plan the right mix of housing that can meet demand and beat the competition and get buy-in from investors.
The key to making smart decisions around your housing developments is having access to accurate, independent data. Make sure you’re prepared for the changing property market in 2018 with Hometrack.
We have a number of powerful tools providing independent residential property insights to help housebuilders maximise profit margins and reduce investment risk.
Alex Rose, Director of Residential Real Estate Solutions at Hometrack
With 14 years experience working with home builders and housing associations, Alex possesses a wealth of knowledge about the UK housing sector and has a proven track record of helping his clients manage development risk, optimise pricing and asset strategy and model the impact of Government policy.