House-builders want to invest in low-priced land

Home values improve compared to 2008

Some 90% need to support rural new homes

A recovery in mortgage finance?

The NLA supports Government’s assessment

According to Galliford Try Homes, house-builders will take the opportunity to invest in historically low-priced land to build a more main stream affordable product for 2010.

Industry housing starts will plateau at around 90,000 in 2010 and completions will rise by up to +15% on 2009 levels to around 80,000, however, output will still be well below the now redundant 240,000 new home Government targets. While consumer confidence is set to improve further into 2010 and demand for new homes continues to rise, transactions will be dependant on having affordable lending in place to complete purchases.

Ian Baker, group managing director for house-building at Galliford Try Homes, said: “From the start of the year we will see banks reassessing the risks associated with mortgage lending as interest rates remain at historical lows and loan-to-values (LTVs) show signs of improving. Lending at more reasonable costs will give the consumer renewed access to funds at the same time as the supply of new homes slowly increases. This will ensure a sustained, affordable market, not a return to soaring prices.”

Home values improve compared to 2008

Home values across the UK has increased by £39.1bn in 2009, according to Zoopla, and although the increase in modest, it is a massive improvement over 2008 when property values fell £811.3bn.

However, with the total value of the British residential housing stock now standing at £5.3 trillion, up marginally on one year ago, it still remains over three quarters of a trillion pounds below its peak of £6.1 trillion in late 2007. The average home in Britain is now worth £205,591 according to Zoopla, up £1,517 (+0.7%) from one year ago, a daily gain of £4 for the average property. This is in stark contrast to 2008 when property values fell by £31,355 (-13.3%) on average, equivalent to a daily loss of £86 per home.

Property prices in England have climbed +0.9% over the past 12 months, having fallen -13.9% in 2008. Scottish values have also risen in 2009 by +0.6% to an average of £156,905 up from £155,597 at the end of last year. However, the property market in Wales is yet to rebound and has seen average values drop a further -2.5% (£3,866) in 2009 on top of the -13.2% decline in 2008.

Some 90% need to support rural new homes

The National Housing Federation (NHF) has warned that the Tories’ plan to get 90% of local people to support new homes in rural areas could hand a veto to local Nimbys.

It expressed its support for the Conservative's proposal to create local housing trusts with planning powers to develop affordable village homes. However, it feared the requisite for such a high percentage of community support would prevent building from going ahead.

A recent opinion poll of 800 rural dwellers across England, conducted on behalf of the NHF, found that only 4% agreed with the 90% threshold. Over half of people said that 50% to 70% was sufficient for new homes to get the go-ahead. The growing rural housing crisis has left a record number of 750,000 people on waiting lists for affordable housing in villages and market towns.

David Orr, chief executive of the NHF, said: “There will always be some people who oppose the idea of building any new homes and if the threshold for a vote in favour of new affordable housing is set as high as 90% then we believe that small groups of local Nimbys will virtually always be able to block the proposals.”

A recovery in mortgage finance?

Cash buyers are losing their grip on the property market as mortgage-backed house purchases rally, according to LSL Property Services PLC.

The percentage of cash buyers rocketed far above average in October 2008, when mortgage financing dried up and 37% of purchases were made in cash. However, in September 2009, the situation began to change as the percentage of transactions carried out by cash buyers began to drop. The percentage of residential property purchases paid for with cash decreased, falling to 33% compared to 35% in August.

David Brown, commercial director of LSL Property Services, said: “ These figures suggest a recovery in the provision of mortgage finance in the UK. When the availability of finance dried up, the bottom dropped out of the UK market and the housing market crashed. The only buyers left in the game were those with cash in hand.  They were looking to get their cash out of the banks and into property assets while they were at rock-bottom prices. From October 2007 that remained the status quo - until this autumn.  In September this year, things changed. The percentage of purchases made using cash is falling as lenders start to provide decent amounts of mortgage finance. ”

The increase in mortgage lending comes despite the FSA blocking new entrants from coming onto the market.  Speaking in November, Hector Sants, chief executive of the Financial Services Authority (FSA), said the regulator had purposely deterred several new entrants to the market.

Sants said: “ In the deposit taking industry, we have worked to limit or reduce retail depositor exposures by forcing firms to exit the best buy tables or the market completely and we have deterred several new entrants to the market.”

The NLA supports Government’s assessment

The National Landlords Association (NLA) supports the Government’s assessment on tenants’ rights to choose to pay rent directly to landlords.

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