5.6% rise in Solihull Property Values adds weight to the town’s Housing Cris

The UK’s reputation as a nation of homeowners is under threat, as the number of houses being built continues to be woefully inadequate in meeting the ever-demanding needs of our growing population. Solihull is no different in this matter and is currently feeling the effects of this issue. As I was talking to my parents the other day at a family get together; the subject of the Solihull Property market came up in the conversation (after the usual weather and politics…). My parents said it used to be that if you went out to work and did the right thing, you would expect that would be buying a house relatively quickly over the course of your career. You would go on holiday every year and you would save for a pension. That was the way of things. Now however, things seem to have changed.

Back in the autumn of 2015, George Osborne used the Autumn Statement to double the housing budget to £2bn a year from April 2018 in an attempt to increase supply and deliver 100,000 new homes each year until 2020.  The Chancellor also introduced a series of initiatives to help get first time buyers on the housing ladder, including the contentious Help to Buy Scheme and extending Right to Buy from not just Council tenants, but to Housing Association tenants as well.

Now that does all sound rather good, but the Country is only building 137,490 properties a year (114,250 built by private builders, 21,560 built by Housing Associations and and a paltry 1,680 council houses). If you look at the graph (courtesy of the ONS), you will see nationally, the last time the country was building 230,000 houses a year was in the 1970’s.

How George is going to accomplish the feat of almost doubling house building overnight, I am not entirely sure. Using the analogy of a greengrocer; if people want to buy more apples (i.e. houses) in a greengrocers’ shop, giving the customers more money (i.e. with the Help to Buy scheme), when there is not enough apples for purchase in the first place, does not really help the situation.

Looking at the Solihull house building figures, in the local authority area as a whole, only 430 properties were built in the last 12 months, split between 260 privately built properties, 140 housing association properties and only 30 council houses. This amount is simply not enough and the shortage of supply has meant Solihull property values have continued to rise, meaning they are 5.6% higher than 12 months ago, rising 1.2% in the last month alone.

I was taught at school that the economics game is all about supply and demand. The demand for Solihull property has been particularly strong for properties in the good areas of the town and it is my considered opinion that it is likely to continue this year, driven by growing demand among buyers. You see, Solihull’s economy is quite varied. This means activity is expected to remain relatively strong into the early summer of 2016, especially as some Solihull buy to let landlords try to complete purchases ahead of the introduction of new stamp duty rules in April. With regards to supply, we have spoken about the lack of new properties in the town holding things back, but there is another issue. Of the existing properties already built, the concern is the number of properties on the market and for sale.   The number of properties for sale last month in Solihull was 291, whilst 12 months ago, that figure was 353, whilst three years ago it stood at 601… a massive drop!

With demand for Solihull property rising, minimal new homes being built and less properties coming onto the market, that can only mean one thing ... now is a good time to be a homeowner or landlord in Solihull.