How the Housing Shortage Is Affecting Land Prices

How the Housing Shortage Is Affecting Land Prices

For every action there is a consequence. For the United Kingdom this is reflected in the way they are dealing with the issue of overpopulation. The issue of a housing shortage has created a consequence whereby the value of land has rocketed. One side effect of this is seeing land investors becoming very wealthy - this article shall explain how.

Housing Shortage

According to several reports, including Lord Best's (Director of the Joseph Rowntree Foundation) working paper, the UK is facing a housing shortage of over a million homes by 2022. This is based on the current rate of house building which has taken a huge knock.

The UK is becoming overpopulated and the rate of house building is not in line with the rate the population is increasing by this means one thing there is going to be a housing crisis.

Dealing with the Housing Shortage

The UK government are finding several ways to increase the rate of house building to deal with the crisis. One method they have implemented has seen the rezoning of land types and sites so that they can be built on.

There are many different land types in the UK, in terms of policy these can be labelled as Brownfield, Greenfield and Greenbelt. Up and down the country houses are being built on these types of sites. This means that for houses being built on Greenbelt sites, for example, the local authorities have to change the classification of planning permission on these sites.

Influencing Land Prices

The consequence of the governments rezoning methods is causing a hike in land value prices. Let's take a look at this further. When you have something that is high in demand, but there is not much of it, this causes a dramatic increase in the value of that commodity, for example, oil.

The same can be said of land. So the UK need to build a lot of homes, in fact around 84,000 homes need to be built each year on undeveloped Greenfield sites. For some, this means having to rezone the land types. Land that is undeveloped is worth much less than land that can be developed upon or is developed upon.

Actions and Consequences

The action of rezoning by local authorities is having a dramatic consequence on land prices. One side effect of this is seeing many wealthy city investors buying UK land prior to rezoning; and ultimately seeing huge returns as a consequence.

Known as strategic land investment, many more people are turning to this type of investment to diversify their portfolio and gain massive dividends. One example has seen land in Birmingham rise exponentially form 15,000 prior to rezoning to 240,000 after rezoning.

A 1500% return on your investment seems to be a hugely significant reason as to why people are turning to this type of investment choice all because of a housing shortage. Actions cause consequences take advantage of this very lucrative consequence and buy UK land today.

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