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FTSE350: Housebuilders need to embrace modern practices

Building more houses only makes sense if people can afford to buy them
FTSE350: Housebuilders need to embrace modern practices

If Brexit is the chief culprit for the current malaise in the housing sector, how come prices in several parts of the country continue to rise? Survey after survey suggests that house price inflation in 2019 will be close to zero, but this masks the fact that some areas will experience price deflation while others will see low single-digit increases.

So, there must be other contributing factors. The government wants to see 300,000 new homes built each year, but this is an entirely academic exercise if no-one is prepared to buy them. This all points to the affordability factor as another key influence.

Brexit will remain a dominant issue, but only because potential buyers are holding back because they are worried about mortgage rates and house price trends. The popular media latched on to and distorted the idea that a hard landing would see prices fall by 30 per cent. That wasn’t the suggestion made by the Bank of England; it was more a case of being prepared for such a movement, one that most people agree is unlikely.

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