Both housing and mortgages are likely to be in short supply whatever the make-up of the new parliament
What will the result of the general election mean for housing? I am writing this piece prior to knowing the outcome but in the build-up we have certainly been short of answers to some of the big questions that face the sector in the next few years.
The Council of Mortgage Lenders has been through the three main party manifestos and its worry is that no party seems to have any idea how to fill the gaping £300bn mortgage funding gap during the next parliament. Federation, housing supply is another looming problem. The industry body says the shortfall already amounts to almost one million homes and this figure is rising because of low construction levels.
It warns that at the present rate of building, every home in the country will have to last for 1,100 years before it is replaced.
If, as the Office for National Statistics suggests, the country’s population hits 70 million in the next 20 years it’s clear that we will require many more houses.
Meanwhile, Gordon Brown’s 2007 pledge of three million new homes by 2020 appears to have been quietly forgotten somewhere along the way.
So the post-election housing landscape is likely to be one in which there is a limited supply of both mortgages and new homes. While there is a certain symmetry in this, it does not make for a healthy housing market.
Getting a home loan will be a lot harder than in recent years, but no harder than it was 20 years ago. Some will argue this is simply a return to sensible banking practice.
Maybe home ownership is not the be-all and end-all of acceptance into the ranks of middle England
With property prices remaining pretty much the same or rising slightly it is possible that the UK will become more like mainland Europe where consumers are happy to rent for the long term. In other words, buying a house may become less important.
So lack of supply will drive up rental values and lack of mortgage availability will have a marginal downward affect on prices. But with high rental values on offer, any gap is likely to be plugged by investors.
Of course, none of this is good news for first-time buyers. Most are praying for increased levels of building and cheaper credit.
It all points towards higher demand for quality rental property which could result in a boom for the buy-to-let sector.
It’s far too early to claim that we are seeing a fundamental shift away from home ownership and towards a culture of renting but I can see a window of opportunity for investors, brokers and lenders.
We already have a generation of 20-somethings who have never experienced home ownership and they will have to come to terms with that in the next few years as I can’t see a significant move towards home ownership for them any time soon.
But maybe not all young adults are like their parents. Maybe home ownership is not the be-all and end-all of acceptance into the ranks of middle England.
Whatever happens, there will be opportunities for those of us in the mortgage market because everyone needs to live somewhere and we’re unlikely to see the state meeting housing demand.
Investors will step in if they can see a financial opportunity, and all of us in the industry need to ensure we are in the right place at the right time.