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Developers hold steady as prices and stock levels rise

Commenting on the data, Steve Lees, Marketing Director said:

“The much talked about Comprehensive Spending Review shed little light on how the government will meet its commitment to increasing the housing supply. However, while the supply side of the equation must be addressed, the supply of mortgages for would-be buyers is an equally pressing issue.

“The Financial Services Authority (FSA) is currently considering the regulatory framework of the mortgage market with a view to making it more sustainable; the housebuilding community is very anxious that the regulator does not replace the excessive lending of previous years with an overly risk-averse system. While Grant Shapps has been vocal, if not detailed, in promoting the new homes bonus as a way to boost the supply of houses, he should be prepared to address the parallel issue of mortgage financing.

“According to the Home Builders’ Federation, around 85% of developers considered mortgage availability to be a constraint on demand. At the moment it is the housebuilders who have stepped in to ‘finance’ the market with their own tailor-made mortgage deals and shared equity schemes, with only a handful of mainstream lenders willing to offer mortgages on new-build homes. This situation is not sustainable, and the government needs to demonstrate some joined-up thinking to ensure that an increase in the housing supply is matched by action to facilitate access to credit to ensure that people have the means to buy."

“Figures from September’s indices suggest that the trend of a narrowing price gap between the new homes market and the resale market is continuing. The current disparity of just over £7,000 is down 64% on June’s figure of nearly £20,000. Developers are rightly championing the cost savings that buying new brings, and with the Spending Review at the forefront of public agenda, the message seems to be echoing strongly with consumers.

“A recent survey from Galliford Try Homes showed that 60% of people are attracted to buying new because of lower running costs linked to better energy efficiency. Equally, the homebuying process is typically a lot less stressful with new build properties, especially with schemes like Part Exchange or Assisted Move available from many developers, which contrasts with the general market where slow sales and collapsing chains are a constant threat.

“The performance of individual property types remains volatile. The average price of a townhouse rose by 6.7% month-on-month, while remaining down 3% on an annual basis, while the price of semi-detached homes was down 1.2% in September but up 8.6% over the year.

“This has led some to question the role of industry research, given the effect that significant headline swings can have on consumer confidence. However, we would argue that, although it is important to read results in context, there is a range of underlying issues across all sectors in the housing market that need to be addressed, and regular analysis plays a vital role in identifying and shaping responses to these important concerns.”

“The number of new homes brought to market almost tripled from the summer lows in September as developers pinned their hopes on the traditional autumn uplift in housing activity. However, while the increase is welcome, it does not paper over the faultline that is the supply problem. The NHF estimates that plans for 1,300 homes a day are being axed as a result of the lack of clarity over planning policy. Grant Shapps makes a valid reply that those numbers relate to Labour targets that were never realistic, but the crux of the issue remains: ensuring stability of supply is a vital part of any attempt to ensure stability of price.”

“The regional picture shows a regular disparity between several of the country’s principal cities and the wider area around them. East Anglia saw the largest new home price rises in September, up 4.2% to £234,909, however in Cambridge, a principal economic centre for the region, prices were down 1.1%. The reverse is true in the Principality, where prices in Cardiff are up 3.6% to £169,117 but across the region they have slipped back 3.9%. Rather than indicating shifts in overall demand, it seems likely that these apparent anomalies reflect changes in the mix of property required in localised markets, with smaller properties in demand for Cambridge’s student and graduate population whereas family homes are in short supply in Cardiff.”

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