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Compact homes failing to impact first time buyer optimism

24-Jun-2014

First time buyers in the UK are saving money on a new home by investing in smaller properties, it has recently been revealed.

A study published by the University of Cambridge said that many homes across the UK are naturally small and are among the most compact in Europe.

The report also revealed that the average new build property covered 76 sqm in the UK compared with 137 sqm in Denmark.

Around 16,000 English homes were analysed for the report and it found that 55 per cent of them had less floor space than the London Housing Design Guide’s internal space standard.

Smaller homes mean that a larger quantity of properties can be built on a single site.

However, the report also flagged up some problems with smaller buildings.

More than a fifth of the properties fell short of total space requirements when the number of occupants was taken into account.

Flats and terraced housing were the most likely to be cramped.

The study also found that between a quarter and a third of people in the UK are dissatisfied with the amount of space in their homes despite many properties being classed as under-occupied, when being assessed by the number of bedrooms versus the number of residents.

Commenting on the findings, Malcolm Morgan, co-author of the report, said: "When the bedroom tax was introduced, there was a lot of implication that those living in houses with spare bedrooms were doing so out of selfishness.

"The amount of space in a home influences how residents live. For example, how and where people prepare and eat food, what furniture and activities can be accommodated, how much privacy people have, and whether necessary changes to the environment can be made if the residents' circumstances change.”

Property demand

Despite the compact nature of many homes in the UK, demand remains robust. A survey, by fund manager Invesco found that returns on residential property continues to be strong.

As a result, sovereign wealth funds are seeking to boost returns by placing a larger proportion of their funds in property, infrastructure projects and emerging markets, compared to last year.

Britain is also the first choice among first time buyers both at home and abroad, due to its stability.

In addition, real estate properties have also been popular among investors.

Optimism

All of this has helped to feed into optimism among today's homeowners, with new findings from Knight Frank and Markit Economics showing that almost 30 per cent of households in the UK believe the value of their home rose in June, compared with just 4.4 per cent who thought it had fallen.

Of the 1,500 surveyed across the UK, 29.3 per cent said that the value of their home had risen over the last month.

In addition, households in every region expect the value of their home to rise.

Conclusion

Despite the compact nature of many of today's homes, this hasn't had a negative impact on the demand for new housing and the optimism felt throughout the property market.
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