Rise in new-build home sales offers glimmer of hope to battered industry

31/05/2009

Although the figures start from a low base, they offer a glimmer of hope to the country’s beleaguered housebuilding industry which has been one of the worst victims of the recession. Sales of new homes hit a 50-year low last year as mortgage lending
dried up and values plummeted.

While few in the housing market are ready to hail a recovery, property consultants DTZ Residential said there were signs that homebuyers with large cash deposits are beginning to return to the market, eager to snap up bargain properties. The value of new-build homes is down by around 20 per cent on pre-credit crunch levels.

The DTZ figures reinforce other positive surveys on the housing market. On Friday, Nationwide said house prices rose by 1.2 per cent between April and May. The latest survey from the British Bankers’ Association showed mortgage approvals rose marginally last month to 27,685 from 26,671 in March.

However, Dougray, a director at DTZ, said there would not be a full recovery until lending conditions improved. He said homebuyers were still being asked for unusually high deposits which are pricing many Scots out of the market.

Although property prices have fallen across the board, demand for new-build properties has suffered particularly sharp falls and some of Scotland’s best known housing developers have been forced into administration. Earlier this month luxury developer Applecross became the latest in a long list of victims.

The majority of housebuilders have ceased work and only 6,000 new homes are expected to be completed this year – a fall of 25 per cent on 2007.

The collapse in the mortgage market has seen many Scots turn to renting instead.

DJ Alexander, Scotland’s largest independent rental agency, said yesterday that it is on course to hit a record number of lettings this month.

David Alexander, proprietor of DJ Alexander, said: “Despite the recession, all the lifestyle changes that require people to move house – for example marriage, children, divorce, death, redundancy, relocation – are still taking place. Mortgages are difficult to obtain, rental leases are not, hence the current level of demand for people wanting to take tenancies.”

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