35: UK needs 3 million more homes in the next 15 years!
According to recent research, the amount of households is forecast to increase from 21 to 24 million by 2020. This is because of:
- aging population and more widowers
- more divorced people - living on their own (many of them elderly)
- increasing / exanding population in part from immigration and in part from the aging population
- perference for people to live alone
- more second homes and holiday homes
The reason why we highlight this, is because with the current level of house building being about 200,000 homes per year, and demolition being 25,000 per year (net 175,000), is nowhere near enough to cater for the increasing demand. This will put further pressure on the already high demand housing areas, particularly in southern England and London/SE. It's a housing crisis waiting to happen - and explains why John Prescott is so keen to act now on the Government's building programme.
A strategy of buying large terraced houses at low cost in highly populationed central city areas in the south of England, that can then be converted to flats in say 10 years time, is probably a good one. Trying to acquire as much property as possible in London before the introduction of UK-REITs in April 2006 is also probably a good strategy, as long as you can find a bargain and there is good rental demand in the area.
It's likely the doomungers who are predicting a house price crash might have to wait an awful long time - again, just imaging trying to building 3 million home in the right place in the UK - its hard enough to getting planning permission for a home extension never mind about 10 new towns!
So - for those with a long view, as long as taxes do not sky-rocket and oil prices don't climb too high (e.g. over $80/bbl) I see residential property in southern England in particular being a solid and relatively low risk investment - as long as you buy a bargain. If you want to hedge against the oil price, buy a house or flat in Aberdeen - the UK's booking oil town. If you favour service businesses and IT - London and the M4 corridor is a good investment area. If you want to take a risk on the Olympic Bid, try Stratford, Bow, Docklands and the Lower Lee Valley.
The only other thing is, we all need something to do in our retirement years, whether this is 3 years or 30 years time - so I can think of worse things than building a nice property portfolio and managing it part-time in my latter years. Nice to hand on to someone else via tax efficient UK-REIT as well.