Incentives helping housing market

Steve Morgan
Steve Morgan
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LEADING housebuilders said Government schemes to boost the housing market are helping the industry edge forward despite tight mortgage availability.

Taylor Wimpey and Redrow said the industry is benefiting from incentives such as first-time buyer relief and mortgage indemnity, plus overhauls to the planning system.

This is helping them make progress amid challenging but stable market conditions, they said.

A separate survey from the Royal Institution of Chartered Surveyors showed surging buyer demand in Yorkshire in October. Interest from would-be buyers rose at its fastest rate since December 2009, although prices continued to drop.

Attempts to stimulate more house purchases include FirstBuy, where builders and the State share the buyer’s deposit burden, and NewBuy, which sees builders and the Government help underwrite the lending risk, allowing banks to offer higher loan-to-value mortgages.

“It is pleasing to note the support of the Government in recognising the importance of new home building,” said Redrow’s chairman Steve Morgan at its annual meeting yesterday.

“The initiatives that the Government have introduced in recent times, particularly the revamp of the planning system and the NewBuy and FirstBuy schemes, have been of great assistance. Without a doubt industry numbers would be considerably lower without this intervention.”

Redrow has schemes in Yorkshire including sites in Guiseley, Wakefield, Halifax, Cottingham in East Yorkshire and Easingwold in North Yorkshire.

Redrow’s non-executive deputy chairman Alan Jackson was yesterday dealt a rebuke by shareholders over his handling of Mr Morgan’s failed buyout attempt, when 24.2 per cent voted against his re-election. Taylor Wimpey said NewBuy is generating “strong interest” and it has now taken 467 reservations under the scheme and its Scottish equivalent – including 137 completed sales. It has sold another 1,179 homes under FirstBuy.

Taylor Wimpey’s Yorkshire schemes include Bradford, Leeds, Rotherham, Sheffield, Barnsley, Mexborough and Wakefield.

It has seen “incremental improvement” in market conditions since July despite restrictions on mortgage availability.

The builder added it hopes to see further improvement in mortgage lending over coming months as another Government scheme – Funding for Lending – feeds through.

As well as Government initiatives, listed housebuilders are benefiting from reinforced balance sheets, cheaper labour, selling more southern and family homes and their purchase of cheap land during the crisis.

Housebuilder Bovis yesterday said it is confident of “further growth in revenue and strong increases in profit margins”.

It expects operating profit margins of 13 per cent for the year, up from 10 per cent in 2011.

Bovis is increasingly shifting its focus to the South, but its remaining Yorkshire sites include a 300-home site in Selby and a development in Barnsley. “Prices in the housing market are broadly stable with prices being generally stronger in the South of England,” it said.

However, economists warned the housing market remain vulnerable as new figures from the Council of Mortgage Lenders showed a sharp slowdown in mortgage approvals in September versus August.

While approvals were up 13 per cent quarter-on-quarter in the third quarter, they were little changed from the third quarter of 2011. They fell 17.6 per cent from August and were also down nine per cent year-on-year.