The pressure on the housing market is high on the agenda of all the main political parties, but there is no quick fix to the imbalance between supply and demand. The government has identified the need for around 30% more new homes per year, and current targets for house building are set at 200,000 new homes annually, rising to 240,000 per year from 2016. However, even if this new target is reached, a shortfall of 2 million homes is predicted by 2020 (source: Estates Gazette). The shortage is most acute in London and the South East where increasing demand continues to outstrip the growth in supply, driving property values higher.

Across the UK, prices have risen to a level whereby first time buyers are struggling to get a foot on the property ladder, fuelling the rental market as a result. Would be purchasers are staying in privately rented accommodation for longer than ever before and the average first time buyer is now in their mid 30s. The property sector is making headway in developing homes to meet this rental demand and the private rental sector now comprises around 3 million homes, but still only represents around 11% of housing stock. This is extremely low compared to mainland Europe where in Germany for example, the figure is in excess of 50%.

This situation is unlikely to change rapidly and presents favourable conditions for property investors.

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