“What we are seeing is catastrophic market failure”. These were the resounding words of Patrick Collinson, editor at the Guardian to describe the state of the construction industry in the UK. The market failure is attributed to demand for houses not meeting supply. It was recorded that only 21,540 new homes were built at the start of the second quarter which is the lowest figure in the past three years. This leads us to question what exactly the causes were. Is the industry facing massive challenges and if so what can be done to combat the situation? It is paramount that action is taken immediately because the population is rising rapidly and rent prices are soaring.
The average rent price recorded in London was an alarming £725 in July. Faced with fewer houses being built, huge deposits being required by the banks, it is no wonder that renting is the trending thing in England and Wales at the moment. First time buyers have been hit badly, due to the increase in the amount required to purchase a property. With many of these first time buyers being young people who cannot afford it, is inevitable that rent prices will go up.
Should we continue to look whilst house prices have increased three times the rate of wage inflation? Certainly not. More attention should be paid to the construction industry; more houses should be built and offered at prices that are affordable to more people. Unless action is taken immediately, first time buyers and indeed those renting will not have a fairy tale ending.