Speaking at a Countrywide event in London, Challis highlighted issues affecting the market and warned that despite suggestions confidence was returning, the UK slipping back into recession could create uncertainty for consumers.
“The economy is broadly flat. A recent Halifax survey said 39% expect prices to rise and a Nationwide survey found confidence at a nine-month high.
“The big concern we had was around sentiment. It’s an astounding difference for the housing market. That little change could be important in regard to our forward trajectory.”
He went on to say that the industry must take action to address the discrepancy between supply and demand in the housing market, arguing that housebuilders need to deliver a greater number of new homes.
“Post downturn, we saw a yawning gap in supply with a shortage of 75,000 houses. We are creating an imbalance of supply and demand. We can be elastic right now but eventually that elastic snaps.
“As a result of significant upfront costs it is more profitable to deliver houses for profit rather than building for volume at a lower margin. At the moment very few players are able to deliver, we need higher levels of competition.”
But he added that growth in the rental market would be good for the economy in the long term, with landlords now reacting to increased demand with higher quality rental properties.
“Affordability will make PRS growth become a long term trend. Flexibility and being able to move house and change jobs will be good for the economy and good for the housing market. We expect this sector to grow to 20% by 2015.”
