UK’s housing mix is not what the UK wants
The UK is simply not providing the homes people want, according to new research from property website, propertyfinder.com. The website analysed the mix of housing in the UK and then asked people looking to move how many bedrooms they hoped to have in their new home. The survey results show a startling mismatch between the homes that exist and the homes that people actually want to live in.
UK housing stock v homebuyers’ aspirations and the resulting excess or shortage of homes on an annual basis
Annual oversupply of smaller homes
41% of the UK’s housing stock has two bedrooms, yet only 21% of homehunters are looking for a property of that size. In an average year, 240,000 homebuyers are forced to buy two bedroom homes when they would like something larger or smaller. Only 3% of homebuyers are looking for one bedroom homes, but because 9% of the housing stock has 1 bedroom, 76,000 are forced to buy a home of that size instead of a larger property.
Annual shortage of larger homes
By contrast, 30% of homes in the UK have three bedrooms, and yet 40% of respondents to the survey want to move to a three bedroom home. This means there is an annual shortage of 125,000 three bedroom homes on the market.
Those wanting a four bedroom home are even worse off. Less than a tenth of the UK stock has four bedrooms, while over a quarter of homebuyers would like to buy such a home, bringing an annual shortfall of 224,000 four bedroom homes changing hands.
In total this means that around one quarter of average annual home purchases are of homes that do not exactly match the buyers’ requirements.
Oversupply of very large homes
Not all of those wanting 4 bedroom homes are forced to trade down. The research also revealed a surplus of 5 bedroom homes among the UK’s housing stock. A significant minority (8.5%) of those ideally wanting 4 bedrooms are buying homes with 5 bedrooms or more instead.
If the homes that buyers say they want actually existed, there would be 4.3m fewer two bed homes in the UK, 4m more 4 bed homes and 2.3m more three bed homes.
Availability, not affordability is the key
Although affordability will always be a constraint on people’s expectations, affordability is a simple function of supply. This is proved by the fact that there is a large oversupply of two bedroom flats, many of which are lying empty and unsold. As a result, prices of these homes have been falling in recent months. The lack of availability of larger homes has in turn affected their affordability as excess demand and insufficient supply has increased the gap between the price of a two-bed and a three bed home. On average the price increment up to a three bedroom home is an additional £49,800.
Jim Buckle, Managing director of propertyfinder.com commented:
“Of course there is an element of wishful thinking in buyers’ aspirations. Many people set out looking for a larger home before realising that it is outside their budget and have to settle for something smaller. But this affordability gap is a determined by the availability problems.
“All other things being equal, three bedroom and particularly four bedroom properties should perform better in price terms than their smaller counterparts as long as the relative oversupply of two bedroom properties persists.
“There is also a small oversupply of very large homes with five bedrooms or more. To a large extent this reflects historic patterns of larger families and lower levels of divorce. Today’s smaller, more fragmented families have led demand to shift towards medium-sized homes.”
