Residential Developers Shift Focus

For the first time since data has been collected, more two bedroom house starts are being created than two bedroom flats. In 2006 35% of the new build market was made up by two bedroom flats, the largest proportion of new private accommodation on the market by a long way. This figure has steadily declined to around 12% today.  Inversely as that figure declined the two bedroom house starts market share has increased by nearly 5%.

The reduction in first time buyers post 2007 has caused a reduction in demand for relatively cheaper accommodation and as the majority of starts are added by large developers there focus on maximising margins has caused a swing to build more houses.

Interestingly a third of all houses added to current stock are being built in the south.

There is still heavy demand for residential development as a whole, it is seen as a safe bet albeit low yielding and maintenance/ labor intensive in comparison to commercial real estate. As commercial property owners look to squeeze value out of their portfolio there has been an increase in mixed use schemes. The reduction in build costs and the change in demand and dynamics on the high street has lead to commercial property owners increasing residential conversions and have been adding flats to there portfolio.