The future of the residential property market was heavily debated last week at the UK’s only conference dedicated solely to the residential property market, where planning, localism and funding were highlighted as the key issues in the sector. 

RESI 2012 – a sellout event held on 13th and 14th September – attracted house-builders, investors, landowners, lenders, brokers, consultants, as well as the Government, which generated a genuine opportunity for each facet of the industry to discuss residential tensions.

The need to free up finance and improve planning processes to get the market moving dominated the conferences, whilst some suggested that a shift in attitudes, to be closer aligned with the continental renting culture, is what is needed to generate opportunity for developers, funders and consumers now and in the future. 

The biggest challenge within the resi sector considering the current state of the market was described by David Dalby, RESI speaker and residential property market consultant for Royal Institute of Chartered Surveyors (RICS), as “…simply stimulating supply”.

He explained: “At the moment there doesn’t seem to be an overall strategy for the challenge of persuading those who have land to release it and for developers to develop. There is pent up demand, but no concerted will to get to grips with the supply issue.”

The Montague Report – heavily discussed in the private rental sector conference and reported by B&C last month – aims to tackle this issue, yet the overwhelming response from the RESI panel was, does the report go far enough?

Liam Bailey, RESI speaker and global Head of Residential Research at Knight Frank suggested another blockage is funding.

He cited the “Lack of loan finance to permit the entry of first-time buyers and others lower down the market” as the biggest challenge, in addition to “the drag on the market caused by high stamp duty rates”.

Mortgage lending and rates were also highlighted by another speaker, Stephen Stone, chartered architect and Chief Executive of Crest Nicholson Plc, as a significant stumbling block.

He said: “Despite all the various lending schemes and cheap money that’s floating around the banks, it’s not resulting in lower interest rates for the consumer. Until this improves it’s going to stifle the housing market.” 

Freeing up finance was therefore something which took centre stage, and whilst bridging is often a facilitator in many a development project its use was largely overlooked during the seminar tackling funding, suggesting that further education about the market is needed.

Bob Sturges, Head of Communications at Omni Capital, said: “I was struck by the lack of top-level coverage of bridging and how it is helping deliver liquidity at a time when the banks are not. 

“However, among the more forward-thinking delegates – property developers, investors and the like – there is a clear appreciation that bridging finance can offer an increasingly attractive alternative to the mainstream. Where they need help is in understanding its nuanced nature and how to access it.

“With no immediate end in sight to the banks’ reluctance to lend, I hope RESI 2013 takes a wider view of the funding scene by adding short term lending to its agenda. Based on what I saw and heard last week, I believe it will be well-received.”

The industry also discussed more about what it could be doing to improve the current fairly stagnant market. 

David Dalby said that both developers and investors can help drive the industry forward and closer co-operation with Local Authorities could be essential.

He said: “Developers need to be more proactive in selling the benefits to local communities of providing homes to enable the next generation to remain local and of the amenity benefits attached to development proposals. Local support is key to getting the backing for new sites. 

“Investors need to look seriously at the potential that exists within the residential sector, particularly in the area of build-to-let, to work with developers to identify sites suitable for the kind of large scale developments needed to provide viable communities and reliable returns. Co-operation and possible partnerships with local authorities may be required to release the land required at an appropriate scale.”

However, private equity funders, according to Liam Bailey, could improve things. 

He reasoned that with the “…lack of bank funding, the obvious alternative is to look to private equity, or equity investment – which effectively means replacing owner-occupiers with investors; this is happening anyway – greater interest from investors will go some way to replacing the void left by first time buyers”.

Yet Stephen Stone believes that the future of the market is firmly in the hands of the Government to “...create a stable economic environment and for the banks and building societies to lend at sensible and affordable rates”.

However, he noted: “As an industry we have an obligation to prepare to increase delivery – thorough planning, technical delivery and skills training.”

Whether the recovery of the market lies within the hands of the sector or government remains to be seen, but what is clear is that it is essential for events like RESI to bring the industry together, making for a more resilient future market.