UK land value is being driven up by a wide range of both short and long-term variables. National housing legislation and multiple socio-economic factors indicate that land will remain a low-risk investment, with increasing value, in the future.
Finite resource with increasing demand
Geographical limitations and strenuous planning regulations have historically restricted UK house building.
With an ever-increasing population and a decrease in the supply of land suitable for development, the economics of supply and demand are pushing the Government to review regulations, and the value of land is likely to increase.
There are two primary factors influencing the predicted increase in land values:
1. The Government’s national house building targets
The Conservative Government has pledged to build 275,000 new affordable homes by 2020, including 200,000 discounted homes for first-time buyers.
A £1bn brownfield regeneration fund has also been promised, allowing local councils to construct up to 400,000 new homes nationally.
Cross-party consensus has been reached on the need for house-building initiatives, so that initiatives are unlikely to be curtailed under an alternative future administration.
2. An increasing national population
The UK population is currently over 64.5 million, rising steadily due to an ageing population, and immigration. The Office for National Statistics project that the UK’s population will rise by 4.4 million within the next decade, increasing to 70 million in 2027 and 74.3 million by 2040.
Nonetheless, fewer homes are currently being constructed in the UK than at any point since the end of the Second World War, despite increased interest in single-occupant dwellings, which has exacerbated the demand for new housing.
This growing demand for finite land resources indicates strong ongoing potential for increasing land values.
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