House
The UK mortgage market remains badly affected by the inability of providers to significantly increase lending, together with consumer reluctance to extend their borrowing in such uncertain times. Datamonitor expects gross annual mortgage lending across the whole market to fall from an expected £138.5bn in 2011 to just £127.0bn in 2012, before rising to £182bn in 2015. This represents an increase of just 31% on the relatively low 2011 amount.
Over the same period, gross advances for self-build mortgages are expected to rise from £790m in 2011 to £1.9bn by 2015, an impressive rise of 141%.
“This growth will be driven by a number of factors,” explains Daoud Fakhri, Analyst at Datamonitor. “One of which is the fact that more consumers are becoming aware of the self-build option. This is largely due to the influence of TV programs like Grand Designs, the desire for more individuality and self-expression, and the perceived low quality and poor design of many new-build properties.”
“Perhaps even more significant than this is the fact that the government’s recently published Housing Strategy report has outlined a number of measures to facilitate the self-build path towards home ownership,” continues Daoud.
Among the report’s recommendations are moves to encourage local authorities to establish demand for self-build housing in their jurisdictions and take steps to satisfy this demand. The report also calls for the government to increase the amount of land available for self-build plots through its accelerated public land disposals program, the creation of a one-stop shop for the provision of advice and information to self-builders, and for the appointment of a "Custom Homes" champion to raise awareness of self-building and promote its benefits.
The UK lags behind many other countries in terms of self-build properties. It is estimated that just one in 10 newly built properties each year are constructed by their owners, compared to over 80% in Austria and over 60% in France, Germany, Italy and many other markets. However, a recent survey by the Building Societies Association revealed that 53% of consumers would consider building their own home if it was easier for them to do so.
“If the government’s reforms are successful in freeing up the market, the UK could be on the verge of a significant cultural shift with respect to house building, one which could create new opportunities for smaller and specialist lenders seeking to differentiate themselves from mainstream mortgage providers,” says Daoud.
Tagged in Home