Residential Property Focus
2017 Issue 1

Residential Property Focus
Bringing home the issues

23 February 2017, by Lucian Cook

Calculating the value of the UK’s housing stock not only throws up some fascinating figures, it also illustrates the issues facing the market

Once a year I set myself the challenge of revaluing the entirety of UK housing stock. It gets increasingly complicated. The spreadsheets are huge. The figures are massive. It gives me an immense feeling of satisfaction. It drives my colleagues to distraction.

 

Not only do I look at how much house prices have changed, but I factor in how much new housing has been built and where. I also look at how the country’s net housing wealth is divided between owner occupiers and investors. Then, in a crescendo of analytical self indulgence, I try and work out how it is distributed between generations.

It chucks out some fascinating numbers. Who would have guessed that the housing stock of just two London boroughs is more than that of the whole of Wales? Who would have anticipated private landlords have as much housing equity as owner occupiers with a mortgage?

Irrelevant nonsense?

When I first undertook this exercise, one of my colleagues suggested it was all very interesting, but questioned whether it had any real relevance to the man on the street. I was crushed.

Arguably, they had a point. Who really cares if the value of housing in the UK stands at £6.79 trillion? Or if that figure has gone up by £1.5 trillion in the past three years? After all, isn’t this just a few numbers with a lot of noughts on the end?

I would disagree. To me, the numbers in our lead article illustrate many of the issues facing the housing market. It is not just a case of whether the value growth of the recent past can continue. Nor is it simply a question of whether the recent slowing in price growth is a blip or a trend.

Painting a picture

It brings home the impact of having a fundamentally undersupplied market. It paints a picture of the challenge in meeting the conflicting housing needs of different generations.

These are issues which the Government has sought to address in its recent Housing White Paper, cheerily titled “Fixing our Broken Housing Market”. It sets out its proposals under four key headings: planning for the right homes in the right places, building homes faster, diversifying the market and helping people now.

One of the people I follow on Twitter astutely described the proposals as steps, not leaps, in the right direction. But they are important steps, steps which Susan Emmett has looked at in more detail in this publication.

They seek to deliver more homes across a much wider range of tenures. For example, they more enthusiastically support the delivery of institutionally owned, purpose built rental accommodation. A topic close to Jacqui Daly’s heart, this is something she has explored in her article on the private rented sector.

From my perspective, it means I will have to review and revise how I go about valuing our housing stock in the future. More time with the spreadsheets, more complicated valuation formulae. In truth, I can hardly wait.

Articles from Residential Property Focus 2017 Issue 1

The true value of UK housing

23 February 2017

The true value of UK housing

With low interest rates and strong consumer sentiment, 2016 witnessed a rapid rise in the value of UK housing, but has the market reached a turning point?

Power and responsibility

23 February 2017

Power and responsibility

Proposals are supportive of higher levels of development and challenge local authorities and developers to do more

Coming of age

23 February 2017

Coming of age

With support in the Housing White Paper, will build to rent finally become the new buy to let?

A gradual comeback in confidence?

The prime market has remained sensitive in the wake of stamp duty changes and Brexit but the key to success is all in the pricing

Market predictions

23 February 2017

Market predictions

Five-year capital value forecasts

 
 

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Key contacts

Lucian Cook

Lucian Cook

Director
Residential Research

Savills Margaret Street

+44 (0) 20 7016 3837

 

Susan Emmett

Susan Emmett

Director
Residential Research

Savills Margaret Street

+44 (0) 203 107 5460

 

Gaby Day

Gaby Day

Research Analyst
Residential Research

Savills Margaret Street

+44 (0) 207 299 3003