Electric cars will electrify and electrocute the housing market
Ian Dickinson is managing director of Lifetime Financial
Of all the issues facing the broker market in 2021, possibly the biggest is staring us in the face. And yet I can find hardly any expressions of concern or advice, on line or in person.
We know now that sales of new petrol and diesel cars are to end in the UK by 2030, but do we know how this momentous decision will impact the housing market?
Certainly I have not seen any lender, estate agents or surveyor factoring the impact of electric vehicles into their pricing.
But neither does it follow that as professionals, we should not be bringing the issue to the attention of our clients – especially in such a topsy-turvy market where people in search of a home as a long term investment have never been as in need of, or receptive to, expert advice.
Brokers are faced with a genuinely unique opportunity to gen up on this dynamic subject, study local authority plans and debates and put themselves in a position of strength with which to help their clients.
This will, after all, be one of the most important development effecting house pricing over the next two decades.
The broker is still the only provider of sound and objective financial advice to whom most of us can turn when it comes to a buying a home, and right now our customers want more than just figures.
They want opinions. It’s not just about finances when societal issues are about to play such a massive part in undermining asking prices and second guessing conventional valuations.
No broker, no comment
EastEnders and Coronation Street live in a cosy parallel reality, but any broker serving an urban market is faced with a different scenario.
The fictional street scape of the 1920s bears no relation to the densification of the 2020s.
Universal charging points will see cuts to parking spaces of upwards of 60% on some residential roads.
This will have a direct effect on demand. Blocks of flats with no parking and terraced houses are the most vulnerable of all to stagnating prices.
Smart houses in leafy suburbs, where off and on street parking is plentiful, however, will enjoy an easier path to electrification, with a direct effect on price.
That said, there are no simple answers. Urban locations won’t be the only one to suffer. The hearts of many small to medium more rural towns and villages are also strangulated with parking problems.
A loss of around a quarter of local parking spaces will have a dramatic impact.
You might argue that demand for housing will rise, that the economy will prove resilient to Brexit and that valuations will maintain conventional trajectories.
But it’s by no means a stretch to suggest that the value of properties without parking or designated electric vehicle bays will suffer, while those with their own car charging or designated bays could easily increase by 15%-20% – over and above the 5-10% increase in value that having parking spaces already commands.
It’s micrographics, not just demographics
That’s why the advice you give has to be granular. For homeowners and landlords, demand will invariably fall for certain types of property. But rise for others.
In many London boroughs car ownership is already falling among younger people, motivated by electric scooters and excellent public transport.
The converse is true for many northern towns, especially the former industrial cities where housing density is high, wages are lower and there are no underground stations.
This split is already borne out when you look at the ownership of vehicles per 1,000 heads of population.
Islington has 187, Westminster and the City of London have under 230. Compare that to Manchester, home of Coronation Street, where there are 300 vehicles per 1,000 people.
Never mind many of the old industrial and mining towns that have 400-500 vehicles per 1,000 population and areas of very dense housing.
Is this an HS2 moment?
As readers in search of further reading might find, in either case, information about how local authorities intend to electrify our parking is limited.
If we take London as an example, the current designated bay size for on-street electric vehicles is 5m x 1.8m, with an extra 1.2m for a disabled bay.
A Land Rover Discovery is 4.8m long, 2.2m wide and a Ford Focus is 4.3m long, 2m wide. Standardised bays will make parallel parking easier, but at a cost of far fewer spaces. But those are my calculations. Not those of a local planning authority.
To make matters worse, a ban on pavement parking has been discussed, which could wipe out half the parking spaces on a road in a single go.
Personally, I can’t help but think that this is a pre-emptive move to lessen the uproar that the electrification of our residential areas will cause.
Great news for the sustainable car sector, bad news for gardeners
I have only scratched the surface of an unfolding issue that offers us both massive anxiety and opportunity.
Looking further ahead, motorway services will double in size, the most successful roadside assistance firms will need twice as many vehicles with which to rescue cars with flat batteries, and services for their drivers in which to wait while they are recharged; home working will be mandatory for those without a car parking space at work.
Closer to home hard landscaping on front plots will disappear. They are already in decline.
In 1991, about 16% of front plots were largely or wholly hard landscaped and this increased to 30% in 2012.
In 2008, regulations were introduced to help prevent further loss of gardens to parking including the need for planning permission – which suggests a heated debate when homeowners are told that they can’t park on the road and also can’t pave their garden.
The issues are endless. Whatever the case, wherever you are, these calculations and compromises will soon be top of mind among your customers, so we have to take them just as seriously.