Unaffordability Is Not The Only Problem Fueling UK's Housing Troubles
Property prices in the UK's largest property market have touched record levels with about 86 per cent since 2009. This means a buyer has to spend 14.2 times his annual gross salary to purchase a property. But affordability quotient is not the only problem that is staring at UK property markets.
Experts believe and data prove the vulnerability of a market is exposed when property prices reach a level that it becomes almost impossible for a common man to own property. Going by that logic, real estate in the UK is seen up against a real test to survive a bubble that is threatening to burst in near future. The danger that looms over the capital London is even more prominent and intimidating.
Also read: UK Housing Is Already Bearing The Brunt Of The Impending Brexit
Sample this.
According to last year's Demographia International Housing Affordability Survey, London has a severely unaffordable median multiple of 8.5. According to property advisor Hometrack, property prices in the UK's largest market have touched record levels with about 86 per cent appreciation since 2009. A buyer has to spend 14.2 times his annual gross salary to purchase a property now. Despite the deep cuts in their asking price, sellers in the city are finding it hard to get buyers for their listed properties.
Record surge in prices resulted into London being ranked second at the UBS Global Real Estate Bubble Index, which is topped by Canada's Vancouver.
Price pains have shot so sharp that, according to a PriceWaterhouse Coopers report, London will turn into a city of renters, with 60 per cent of its population living in rented accommodations by 2025. As people have to borrow more to buy property, the dependence on renting is seen growing remarkably. This is especially serious considering London is a dream city for people from across the globe.
The problem does not end here. Amid skyrocketing prices, scarcity of workers is emerging to be another major pain point.
In a latest report, Amsterdam-based global consulting company Arcadis says that the construction industry of the country must recruit more than 400,000 people every year between now and 2021 "if it is to create the homes and infrastructure the nation needs". This implies that the sector must hire one construction worker every 77 seconds. For building 270,000 new homes over the next five years, over 370,000 new people have to be employed an additional 36,500 workers every year must be employed to build national infrastructure requirements.
Mind you, this analysis does not factor in the likely impact of Britain's exit from the European Union which might make matters worse.
Terming it a skill gulf and not skill gap, Arcadis Director of Workforce Planning James Bryce suggests that the government must look to "secure the rights of EU workers currently operating in the country, simplifying the visa system and minimising the tax burden on workers and business".
"If this fails to happen, many of the projects that the British government have earmarked for economic stimulus could prove more difficult and costly to resource. In the worst-case scenario, these projects could fail to be delivered at all, reducing our ability to grow the economy and limiting investment in the industry," Bryce says in his analysis.
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