"Affordable homes, lifestyle changes and sustainable, energy efficient new build properties will be a key part of our housing market going forward"
One of the growing areas in affordable housing is shared ownership, which is currently a very small part of the market at around 2% of housing stock but it’s set to grow.
I believe there are three key drivers within the affordable housing market and the first, obviously, is affordability itself, second is lifestyle and third is sustainability.
Affordability
We have seen the cost of living rocket this year. Fuel at an all-time high, energy costs are spiralling out of control and will surge again in October, inflation is at its highest in four decades at 9% and expected to rise even further.
House price growth has been accelerating since the second half of 2020 when the market was boosted by the stamp duty holiday and the so called ‘race for space’. It is expected that house price growth will slow during the year but it was still high in March at 9.8%, according to the latest ONS data. The average house price stood at £278,000, which is £24,000 higher than 12 months previously.
With affordability being a stumbling block for many people, the need for affordable housing is as strong as it ever has been. Help to Buy (HTB) is coming to an end, officially closing in March 2023, but take up has been slowing down since eligibility rules were changed in April 2021. HTB is now restricted to first-time buyers only and there are regional price caps.
In the last quarter of 2021, there were 8,913 properties bought with an equity loan, down by 41% from Q4 2019. But the scheme has been successful helping to put 355,634 households into new homes since it launched on 1 April 2013.
With HTB on the way out, will this mean we are going to see shared ownership take an even bigger slice of the new build market? I believe it will and we are seeing a growing demand for shared ownership from our clients.
Lifestyle
As we have exited the Covid pandemic it is clear that the way people live is changing. The work from home culture that arose during the pandemic remains very much a reality with many firms now operating a hybrid working week.
Research from the Chartered Management Institute found that 84% of managers said their organisation allowed hybrid working. Two-thirds of these organisation began working this way with the outbreak of Covid.
An ONS survey looked at a week in January 2022 and found 36% of working adults reported having worked from home at least once in the previous seven days. The peak week was recorded in June 2020 during the first lockdown when almost half of all workers worked from home (49%).
All this homeworking has led to people wanting more space in their home for an office. But there has also been an increase in the number of people starting new businesses during the lockdowns due to furlough and redundancy. They also need more space for an office, studio or storage.
The accountancy firm UHY, said there were 726,000 new businesses created in the UK in 2020 compared to 636,000 in 2019, representing a year-on-year rise of 14%. The creation of online retail businesses has really surged. The first lockdown in the second quarter of 2020 saw an average of 4,613 new online retail businesses set up in the UK each month - 66% higher than the same time in 2019 at 2,783.
Sustainability
Climate change is a hot topic and as property produces large amounts of greenhouse gases, new build properties have a huge part to play. The government has said it wants all properties to have an EPC rating of C by 2035 and most new builds these days are built to a B rating.
People looking to buy a new home want energy efficiency and cheaper bills. This is particularly highlighted now as more people are moving into fuel poverty and can’t afford to pay their soaring energy bills.
The Government’s Future Homes Standard will be introduced by 2025 and requires new build homes to be future-proofed with low carbon heating for energy efficiency, including installing electric car charging points. Electric cars are becoming more popular and some housing developers are starting to install charging points in their new builds now.
Shared ownership
Although shared ownership has been around since the early 1980s, it is clear that demand is now increasing and more new shared ownership homes are being built.
Government figures show that around 4,080 units were completed in 2015/16, rising to a high of 18,220 in 2019/20. Between 2015 and 2021, 76,500 new shared ownership homes were delivered. The government’s five-year Affordable Housing Programme is set to create up to 90,000 shared ownership properties by 2026.
Affordable homes, lifestyle changes and sustainable, energy efficient new build properties will be a key part of our housing market going forward - and shared ownership will be part of that customer journey.
