Clearwell Capital

Clearwell Capital Ltd.
Audley House
12 Margaret Street
London
W1W 8RH​

0203 405 4810

Disclaimer

This website is for use by property professionals and introducers only. Clearwell Capital Group Ltd and its subsidiaries are not regulated by the Financial Conduct Authority. Your property may be at risk if you do not keep up repayments on any loan secured on it.

Company number 07334412

Could investing in small property developers be the solution to the housing crisis?

Another House Crisis Refresher

 

With ever-inflating house prices making it increasingly impossible for first-time buyers to get on the property ladder, it is widely accepted that we in the UK are in the depths of a housing crisis. An increasing number of young people are forced to live with their parents well into their 20's, simply because they cannot afford to move out, as well as a lack of social housing hitting those at the bottom end of the income ladder. It's even something that all major political parties agree upon, with leaders across the political spectrum clamouring for a solution. This begs two questions: firstly, why are we experiencing a housing crisis and secondly, how do we fix it?

 

The answer to the first of these questions is relatively straightforward: we don't have enough houses. If you ask any A-level economics student, they will tell you that a good in short supply will have the price bid up until those who can't afford it drop out of the market. This is old news however as politicians as far back as David Cameron in 2011 have been calling to "get Britain building".

 

The dearth of housing goes back as far as the financial crisis in 2007. Prior to then housebuilding roughly equated to requirements, however since then there has been an approximate shortfall of 100,000 houses a year. It is estimated that around 250,000 new homes are needed each year, while only 140,000 are being built.

The role of small property developers

 

Since the financial crisis, banks and other large institutions cut funding lines to many small businesses

 

 

Companies such as Clearwell Capital are 

 

The role of small property developers

 

So, we've established that we need to build more houses. We also know that roughly the right amount of houses were being built in the mid-late 00's, so what's changed? 

 

A relatively unknown statistic is the number of houses built by large, volume housebuilders, such as Barrats and Taylor Wimpy has grown since the start of the crisis, whereas number of houses built by small to medium-sized developers has contracted significantly. Had small and medium-sized housebuilders' production increased by the same amount as volume builds, housing demand would be met comfortably.