Thu, 12 Mar 09
Housing market news this week turned its attention to the lack of supply of homes, in particular the lack of new, affordable housing.
Latest figures from the Office of National Statistics showed that unless more homes are built the next generation would face a major housing crisis.
The figures show that the number of households will rise to 27.8 million by 2031, an increase of 6.3 m. This is mainly due to a growth in the population as people live longer as well as an escalation in one-person households, which is set to rise by a staggering 60% by 2031.
The House Builders Federation was among those this week to urge the government to do more to increase supply and in particular revise its already challenging target of building 3 million news homes by 2020.
The National Housing Federation this week predicts that the number of new homes being built during the next financial year will be just 70,000, a fall of 50% on this year’s house building figures and the lowest figure since 1921, excluding the Second World War.
Among the HBF’s recommendations are to encourage lenders to boost mortgage lending and use public money to kick start housing projects.
Stewart Baseley, executive chairman of the HBF said: "Today's figures are a stark warning of the need to get builders building again. Housing supply is being strangled by the lack of mortgage availability at the very time we should be increasing output. The Government needs to act now, otherwise further jobs and industry capacity will be lost - and let us be clear there is no one else apart from the private house building industry going to build these desperately needed homes”.
Some good news for Baseley came this week from The Royal Bank of Scotland, which pledged to pump £1.7bn worth of mortgages into the Scottish housing marketing over the coming year.
Part of this was only possible following Government intervention, with around £500m of the money has been made available through funds accessed through the Treasury’s Asset Protection Scheme.
RBS has pledged that among these new mortgage deals will be loans of up to 90% of a home’s value to help first time buyers.
Paul Geddes, chief executive of consumer banking at RBS Group, said: "Our message to customers in Scotland is very clear, we are now more than ever open for mortgage business.
"We hope the latest commitment goes some way to refuelling the Scottish economy and provides borrowers with the financial means to get back on track and realise their plans for the future."
The Scottish government is clearly impressed with finance secretary John Swinney saying the move would be a significant boost to the Scottish housing market.
He said: “With interest rates having reached a record low, it is crucial that the banks now lend effectively and appropriately to help householders and businesses across Scotland.”
The hope now is that such a move is replicated by the wider mortgage sector across the UK.
Latest figures on lending from the Council of Mortgage Lenders show that the UK wide market is still in a dire state, with potential buyers struggling to find good deals.
In January this year the typical first time buyer had to find a deposit of around 24%, the highest figure since the CML began compiling statistics on deposit levels.
In addition lending activity has reduced at an alarming rate over the last year. In January this year there were just 23,400 loans handed out, compared to 48,600 in January 2008 and 32,400 in December 2008.
Further evidence that the property market is in urgent need of a boost came from the Royal Institution of Chartered Surveyors.
Its monthly survey of estate agents found that just nine homes were sold on average per surveyor in the three months to February – see Home News 12 Mar, 2009.
This is the lowest level since RICS’s survey began in 1978 and comes amid four consecutive months of rising enquiries from new buyers that agents are unable to convert into sales.
In fact new buyer enquiries are now increasing at the fastest pace since August 2006 suggesting that demand is still there even in this current gloomy housing market.
By Joe LepperSee also - Mortgages, House Price Indices Asking Price Index, House Prices and Trends
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