The low number of yearly housing constructions has been deemed a ‘big risk’ to the housing market and the wider economy.
Speaking at yesterday’s Financial Services Expo Manchester, which took place at Emirates Old Trafford Stefano Silvestrin, part of the Economics Team at Nationwide Building Society said that the low level of housing construction taking place in the UK, especially compared to the yearly projections for new household formations, was a cause for concern.
Silvestrin commented: “Housing construction statistics are trending upwards but we have a long way to go before it matches the expectations of household formation numbers. The big risk is that construction is lagging household formation.”
Robert Sinclair, chief executive of the Association of Mortgage Intermediaries, agreed and referred to the lack of housing being built as a “chronic systemic weakness’ in the market. He suggested all political parties needed to come up with a 10-year programme, prior to next year’s General Election, in order to meet the 200,000-300,000 new properties needed each year to meet demand.
Silvestrin however did paint a relatively positive picture for both the UK economy as a whole and the housing and mortgage market saying that the economy looked to be rebalancing and that the latest data flows showed that investment has picked up.
Levels of first-time buyers had been steadily increasing since early 2012 and rates were near record lows across the full LTV spectrum. However Silvestrin did suggest that in key areas, notably the provision of high LTV mortgages, there was much more to be done.
He said: “High LTV lending is still very much subdued. The second part of the Help to Buy scheme may have improved the supply of high LTV products but it looks quite limited at the moment. We are seeing that the higher the LTV the more likely the borrower will go for a fixed rate. ”
On the issue of increases to Bank Base Rate (BBR), Silvestrin said: “The market is expecting the first increase in BBR to happen in May next year and from there rates are expected to increase gradually and slowly.”