Market Update
Description
So is the housebuilding market on the mend? The national press can’t make up their mind. Utilising the surveys on house prices they are up a little one month and down a little the following month. However, this in itself suggests we are bumping along the bottom of the market. In other words the bulk of the price drops have been suffered already. After 18 months of declining prices this is good news.
From the coalface, we are hearing more positive signs. Without exception, every sales director we have spoken with in the past three months has reported better visitor levels to site and most importantly selling more homes. In most instances this improvement has been significant and is now reducing stock levels at such a rate that builders are now recommencing building on site and a number are back in the market shopping for more land. In short, the housebuilding production line is grinding back in to motion.
No-one is expecting a bumper second half of 2009 but the incredibly low base rate coupled with realistic pricing and a willingness to do deals has re-alivened the new homes market.
The remaining piece in the jigsaw is a range of mortgages that are viable for first time buyers. For months now, a 20% deposit has been the minimum. On an average house price of around £150k this has left first time buyers searching for a £30k deposit. A tall order at any time but particularly so in the middle of a recession. However, there are signs of confidence creeping in to lending policies. There are now 7 products on the market offering a loan to value ratio of 95%. As this figure grows, the housebuilders will experience a surge in demand which will leave them needing to recruit heavily.
Most builders have lost between 50% and 70% of their staff in the past 18 months. Any tangible increase in output will require substantial recruitment drives. It more a question of ‘when’ rather than ‘if’
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Tags: housebuilding
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