400,000 New Homes a Year for the UK!

Population experts and academics claim that the UK requires 400,000 new homes a year to house the growing population. This begs the question as to who is going to finance 400,000 new homes and who is going to build them and more importantly than all that where on earth are they going to be put?

It is all very well putting out these sort of figures but if 400,000 new homes were built the bottom would drop out of the housing market that is already at the lowest level and in the weakest state that it has been for many years. Some people who have their own homes already in negative equity would never be able to move or refinance their debt. Indeed as the British economy has been heavily influenced by the housing market and indeed past growth has been almost entirety reliant on a buoyant housing market, such a house-building project would destroy an already weak economy.

The Government are trying to do a little bit to help a difficult situation where the economy is not moving and to try and get some new blood in the conveyancing system. They have announced this week that they will help financially support those obtaining mortgages at 95%. There will be an insurance system to help cover any loss suffered by financial institutions that lend to homebuyers who then subsequently can’t pay their mortgage. However, this presupposes that these new homebuyers are able to find even a 5% deposit plus the cost of the move and indeed that they have a job to pay the mortgage month on month.

Any support for the housing market is welcome. Until the financial institutions feel more confident to lend, homebuyers will not be able to borrow and consequently the whole system remains stagnant. As mentioned above, the whole economy for the last twenty years has been built upon the housing market and with the world economy in meltdowns, such moves may be the only way to move forward in the short term.