The UK housing market struggle: Demand soars, supply lags behind

Housing in the UK is a constant topic in the news. At the moment, there is a great deal of demand and no houses to fill that need.

There are a number of reasons why the UK has found itself in this situation, such as population growth, urbanisation and issues with supply. So, what does this mean for the future?

The rising demand for housing

It is no secret that the global population has grown at an incredibly fast pace in recent history and the UK is an example of this. In the middle of 2011, the UK population sat at 63.3 million people. Fast forward to 2021 and there has been a 5.9% increase to 67 million people. In that same time frame, the number of houses being built was significantly behind the population growth, and this has been a factor since the 1940s.

As well as the population growing, it is also ageing as well. In 2021 almost 19% of the population were aged 65 and above which equates to around 11 million people. This demographic tends to hold onto their houses for longer as they live longer, meaning that there are fewer on the market at any one time.

Factors constraining supply

The UK being an island means that there is limited land available for new developments. When you factor in protected parks and greenbelt lands the amount drops even further. When you combine this with rigorous planning regulations and a shortage of skilled labour, the challenge for builders is apparent.

Embarking on a new build project is a risky investment, but one that is desperately needed. It is essential that builders purchase builders’ insurance to ensure they are protected should something go wrong.

Implications for society

A shortage of affordable housing has had a massive impact on the whole of society. Many people are becoming long-term renters meaning they stay in rented accommodations for the majority of their lives and never become homeowners. This reduces the amount of rental properties available which in some cases leads to overcrowding in HMOs (houses in multiple occupations).

Increased competition for housing leads to an upswell in the market causing both rental prices and purchasing prices to increase. Adding in the current economic situation also means that homeowning is a dream that seems impossible for many families.

Addressing the crisis

There needs to be a multi-pronged approach to fix this situation. Starting at the top with the government, policies need to reflect the change in society. It can be argued that replacing the current planning system with a more flexible version will free up more land and approve more lawful construction projects.

This will boost the supply of homes, both public and private and help give people a stable home for the future.