Why investors need to ignore property demand and look at the supply story

National obsession with house prices leads pontification on the demand outlook but the supply-side of the industry is where the real story is, argues Santander's Stephen Payne.

It is an unusual situation, when a sector that has performed so well over the last few years can still be described as a contrarian view. But with the UK housebuilders this is the case.  There is a London-centric view of the sector in the city, with elevated London house prices fuelling fears of another bubble in the housing market. The reality is house prices outside of the South East have not yet even recovered to pre-financial crisis levels and this is where the bulk of the sector actually build. Our national obsession with house prices leads to lots of pontification on the demand ...