The property development market in the UK has been in a period of promising recovery that began two years ago and market professionals are confident the upward trend will continue as the nation pulls out of a market slump and into an era of project expansion that includes building for both residential and commercial. As history has proven, land and homes are long-term assets that remain in constant demand as the needs of the growing population evolve and its needs mature. UK land and property is a commodity that continues to increase in value and remains a solid investment even withstanding periods of economic hardship. Unlike buying into the stock market that entails taking a risk that the funds could be lost through mismanagement or a dip in values, saving cash that can be stolen or valuables that can be damaged or misplaced, buying property is a solid investment that can be maintained for many years and is often passed down through generations. Even during periods of unstable market fluctuations or sharp economic downturns, investment in property provides ample opportunity for development, agriculture, residential housing, business and resale.
Newest Recovery in UK Property Development Follows Global Economic Crisis
Following a rise in excess of 200% during the period between 1996-2007, house prices in the UK hit a high point in the third quarter of 2007. In London alone the market grew some 310% during the same period and other regions around the UK followed close behind. When the world economies experienced a disastrous financial meltdown that began during the latter half of 2008, the land and property development market in the UK became stagnant as did most throughout the globe. There was a decrease in the demand for new home purchases and the sale of existing homes went into a slump. Since housing prices had bottomed out, it made more sense for homeowners to concentrate on holding on to what they already owned without trying to upgrade or enter the market of buying and selling. By 2009 developers and property investors began to experience a recovery taking shape as the government provided programs designed to aid the general population in buying first homes and qualifying for affordable mortgages and loans. Many companies have since realized the great potential in the UK property and land development market and purchased land for building new housing projects, luxury accommodations, industrial complexes and shopping centers.
National Programs Initiated to Encourage Development of Private Housing
The UK government has taken great strides towards encouraging the economy by supporting land and property investment and project development. As a way of jump-starting the nation’s building and development industry in the right direction again and displaying confidence in the UK’s economic system after the world financial crisis of 2008, some inventive emergency measures were initiated. One of them, called the “Home Buy Direct” program, was a scheme that allowed developers to team up with the government in providing potential buyers with up to 30% of the value of a home loan. In accordance with that policy, millions of pounds have now been put on the fast track, or a specially expedited plan, to enable the building of luxury accommodations as well as affordable housing for those without homes, first time buyers and homeowners who were trading up into a higher market. The government also poured £400 billion worth of funds into UK banks as a rescue package as lenders decreased the LTV ratios. As another boost to investment and development in the UK, interest rates have become affordable and favorable tax rate schedules have been introduced.
So far the plan appears to be successful as a positive growth of some 6.5% has been predicted for the coming years from 2013 through 2015, which will include an upswing in demand, finished transactions and positive activity levels in the property development market. To further encourage a wary public as well as the financial lending institutions, the London Olympics that are scheduled for 2012 will bring a lion’s share of development projects to the region, due to the requirement of major productions that will be carried out by the local development and building industry. It is expected that spending on the complicated but massive projects required for the 2012 Olympics’ infrastructure could reach £9.3 billion, or around $13.8 billion in US dollars. The amount of the budget earmarked for the necessary sport venues, including accommodations, and for building the Olympic Park is £3.1 billion and the Olympic Village itself will require an additional £1 billion in funds. Along with all the building needs, the mass transit system will also be upgraded and many UK residents will find employment in planning and developing the Olympic stadium and the Olympic Village. Again, this will be a great boon to the UK development companies and property management firms.