UK housing market making a comeback

UK housing market making a comeback
Dec 10, 2009 - PropertyGuru.com.sg

The UK housing market is making a comeback as investor demand for rentals disappears and home buyers reject 'little box' apartments.

Single-family attached houses accounted for approximately 24 percent of all residences started in England from January to September. According to the National House-Building Council, it is the highest proportion since 1992. Semi-detached homes comprised 17 percent of all starts, a level not reached since 1999.

“Most people dream of having a front garden and a back garden, with a little bit of security around them,” said Bellway plc Finance Director Alistair Leitch.

UK homebuilders who once rushed to build flats are now attempting to meet the demand for private homes. The setback is occurring as banks begin to control lending to buy-to-let apartment investors, which helped prices to go down by nearly a quarter from the 2007 peak through March 2009. According to Nationwide Building Society, the biggest mortgage lender in the country, it is already the most of any type of British residential property.

From January to September 2009, apartments accounted for approximately 40 percent of all starts in England, the least in six years, according to the House-Building Council, the biggest insurer for new homes in the UK. Around 60 percent of the properties that Bellway plans to construct in 2010 will be houses, compared with just over 50 percent in the financial year through July, said Mr. Leitch. To date, the company has sold a total of 4,380 homes.

A government policy that emphasizes high-density development on abandoned urban sites has driven the demand for apartments. It aims to preserve the limited supply of undeveloped land while it increases the number of dwellings in England. The government announced in July 2007 a target of three million new homes by 2020.

The policy was effective. As there was apparent increase in apartment blocks, detached houses declined to 12 percent of the total in 2008 from 44 percent in 1997. The proportion of apartments increased from 15 percent to 51 percent in that period.

“The industry gets blamed for building little boxes, but we take our lead from the planners,” said Steve Morgan, founder and chairman of Redrow plc. “The industry was guided by the government towards a high increase in density.”

He also added that the rules caused pent-up demand for family housing.