Planning and mortgages are main issues for builders

Nia Williams

May 3, 2011

This is according to Knight Frank’s 2011 Housebuilder Survey which shows that planning is becoming a bigger issue for housebuilders, with nearly 60% of builders surveyed saying localism legislation will slow the speed of obtaining consents.

However, mortgage finance is the single greatest threat to the new homes sector, closely followed by future rises in interest rates and weak UK economic growth, according to the survey, with 39% of builders surveyed suggesting implementing subsidised mortgages for first-time buyers

Knight Frank finds the UK new homes market will fail to deliver nearly enough homes to service the growing population, with housing starts down 43% on 2007 levels. At current rates, the number of new homes being built is less than 50% of the annual increase in the number of households.

Housebuilders reported 3- and 4-bedroom houses as the most in-demand product, and 58% predicted the average size of developments, in terms of the number of units per development, will decline – reflecting an ongoing move by the industry away from urban and apartment-led schemes.

Commenting, David Fenton, head of regional land, Knight Frank, said: “In 2009 the sluggish land market struggled to recover from the down turn. In contrast, 2010 has seen the more enlightened house builder focus on the better sites with quality housing product in a defined and active market place. The schemes need to be well planned, less dense and more family focused.

“In less affluent areas, developers are procuring short-to-medium-term land using creative purchasing models, such as phased payments and land payments linked to unit sales, thus protecting their return on capital.

“The mortgage market continues to constrain buyers but we believe the housing industry sees a glimmer of hope on the horizon, with a number of schemes timed to deliver product in 2013 when financial conditions will have hopefully improved.”

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