ROOF Blog

Evidence is growing that the worst is over in the recession-hit property market following a string of cautiously optimistic assessments from the UK’s leading housebuilders.

Persimmon set the tone this month when it predicted a moderate recovery. Barratt, the UK’s largest housebuilder, and Bovis Homes echoed that sentiment with similarly upbeat forecasts.

The number of new homes being built rose to its highest level for over a year in the three months to October, with work starting on 25,000 new properties, an increase of 27 per cent compared with the same period last year.

However, housebuilders are reluctant to be too bold over the prospects of a sustained recovery because of the fragility of the market and the uncertainty over the continuing availability of mortgages.

‘We are way ahead of where we were this time last year, but we’re not out of the woods yet and there could still be plenty of problems for the industry were the banks to pull back lending,’ said Bovis’ chief executive David Ritchie.

Redrow and Barratt Developments accused the banks of downgrading valuations on new properties to restrict lending. Redrow said the practice of down valuation by surveyors representing mortgage lenders was ‘widespread’ and posed a ‘major obstacle’ in the recovery of the housing market. It blamed the gap in valuation for about two-thirds of its current cancellation rate of 20 per cent. A spokesperson for Barratt said the policy was creating a ‘two-scheme mortgage sector’ and added that house builders were asking for new builds to be valued ‘appropriately’.

The number of applications to build new homes has risen by 10 per cent in the three months to the end of April 2009. It was the first quarter on quarter rise in almost two years. However, figures from the National House Builder’s Council (NHBC) show the sector is still depressed with the level of applications down 53 per cent in year on year figures. Imtiaz Farookhi, chief executive of the NHBC, said that anecdotal evidence from house builders and developers suggest that conditions are easing slightly.

The construction industry declined at its slowest rate for seven months, leading to hopes that the worst is over. The Chartered Institute of Purchasing and Supply, which compiles the report said there was a rise from 30.9 in March to 38.1 in April – its highest level since September, which some observers put down to the government’s economic stimulus package encouraging infrastructure spending being brought forward.