Housebuilders: mortgages 'crucial to recovery'

Thursday, 09 July 2009 12:00

Housebuilders have blamed the lack of mortgage finance for the property slump and warned lenders will have to ease criteria before a recovery can begin.

Mark Clare, group chief executive of Barratt Developments, said over the last six months, housing stability has continued.

Mr Clare added: "We have seen higher sales rates, lower cancellations and prices leveling.

"We are not however going to see a sustained improvement in trading conditions until the availability of mortgage finance, particularly in the higher loan to value segment, recovers."

Visitor levels per site during the second half were up 11.9 per cent on the previous six months.

But sales prices remain under pressure, mainly as a result of constrained mortgage availability and down valuations, Barratt said, although there has been greater stability over the second half.

Sustained recovery will depend on the wider outlook for the economy, particularly the availability of mortgage finance which remains highly constrained, the firm added.

Redrow has also blamed the lack of mortgage availability for subdued sales.

"Although recently there has been some easing of the situation, the most significant concern to the industry remains the chronic shortage of mortgage supply exacerbated by the widespread practice of down valuations by surveyors representing mortgage lenders.

"Without doubt this is a major obstacle to the recovery of the housing market and we are of the view that resolving this issue can play a significant role in a recovery of the economy as a whole," the builder said in a trading update.

A study from the National Association of Estate Agents (NAEA) suggests the public also blames the banks refusal to lend for the sluggish housing market.

The survey of 1800 people found 58 per cent believe banks must begin lending more if the UK is to pull out of the property slump, while 22.5 per cent said they were unable to find a mortgage that they qualified for anywhere in the market.

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