Black's Property Blog

Adrian Black delivers critical property market insights and the influences, behaviour and money driving them.

Supply, demand, land and bricks

by Adrian Black, Tuesday 20 May 2014

Currently there is lots of talk about property supply - a comment we made immediately after the 2013 budget when "help to buy" was introduced - quite simply the key to a steady property market is balancing demand and supply and not increasing one without the other.


Comments by Kevin Cahill on the recent radio 4 program "Simon Evans Goes to Market" that only 10% of land is built-on in the UK are very sensible - something we can all appreciate to some degree circling in a holding pattern over a major airport on a cloudless day.


London living (with the possible exception of a lack of great free education for kids) has become more attractive over the last 30 years (cleaner air, electric trains etc..etc..) so more people want to live here.  The problem is that there are few places to build.  Short of external factors / influences (property taxes, interest rate rises, property void period charges for rental properties) what is more supply going to be stimulated by ?  The current motivation is just to buy more property as the carry (loan) lost is low and alternative considered-safe investments (e.g. government bonds) offer low yields.


It is also worth noting that it's not the price of property that is increasing - it's the price of land - a brick is a brick.


So please Mr and Mrs Government - let's make more land available for building (the right sort of homes where demand is greater than supply).  This will increase supply.  All this is not new - it's exactly what happened when we created the suburbs - Ebbsfleet is a step in the right direction - but why so long in coming and why not more ?     

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