What Will Mandatory Housing Targets Mean For House Prices?

An ambitious proposal to construct 1.5m homes across the United Kingdom over the next five years has taken one step closer to becoming solidified, but what will that mean for the property market and estate agents that are currently active?

The proposals, published in an official government release, aim to construct at least 370,000 homes a year, up from an initial target of 300,000 and would total 1.85m homes if these targets are met.

Many of the details will be released in the Autumn Budget or before the end of the year, but a question that will matter for both buyers and sellers alike is how this will affect house prices that have remained at record levels for several years.

The intended answer is that the overall average will fall, due to the simple rules of supply and demand. As more homes are built and become available that are of the quality, size and design that people need, prices should fall due to market mechanics.

The rules for property development are also set to be overhauled to focus on providing social housing in areas that need it the most, with reforms designed to approve development on brownfield land, “grey belt” land such as old car parks and petrol stations, as well as low-quality green belt land.

With more homes in the same areas, there is a chance that property prices will start to fall, assuming that the plans proposed actually happen. Given the peaks the market has seen, the only way is down.

At the same time, even with the ambitious targets being set, it is unlikely that house prices will suddenly fall outside of a sudden dramatic fiscal event or if the policy is implemented in areas in a way that does harm to the housing economy, such as building too many homes without adding extra capacity to nearby infrastructure.