Safe as Houses?

Posted on January 16, 2012 by Paul Elliot

The housing market has been one of the biggest victims of the credit crunch. A succession of scenarios where lenders have refused to lend, so builders haven’t been able to build and buyers haven’t been able to buy have led to the only thing being built is a metaphoric wall that is affecting many. In the last few weeks however a few bricks have been knocked off the top by the hint of opportunity.

Just last week, the government promised to help build up to 16,000 new homes as part of a £400 million drive to enliven the economy and help first-time buyers. It is a move that will let developers bid for funding, and allow them to build new housing from next July. Further to that, an extra £50 million has also been set aside to refurbish empty homes and the government will also underwrite 100,000 mortgages for new-build homes.

The announcement is one that won’t be shunned by construction companies even though it may fall short of a massive investment push needed to get Britain building. You know the saying: every little helps. It certainly helped share prices as on the back of the announcement shares in Persimmon, Britain’s biggest house builder, were up 3 percent, with Barratt Developments rising 4 percent, Taylor Wimpey up 4 percent, Bellway up 3 percent and Berkeley rising 1 percent.

Meanwhile in Scotland, a second wave of housing plans to be launched under the National Housing Trust initiative has now seen councils inviting bids from house builders and developers to build affordable homes worth £300m. It is a scheme that allows developers and local authorities to jointly fund home building projects with local authority loans that are being underwritten by the Scottish Government.

These announcements aren’t going to pound the industry into a Popeye-like resurgence from the brink but it is pleasing that some muscles are flexing in the public sector. Perhaps more importantly, there are sounds of shovels on dirt coming from the private sector as Swedish-founded contractor Skanska announced plans to build 800 UK homes a year by 2015.

Skanska are said to have spotted an opportunity during the financial crisis to enter house building, having spent the past decade developing its construction business in the UK, and have done so with a plan that is set to make Skanska one of the top 20 house builders in the country.

Then Mersea Homes and Countryside Properties announced plans to build more than 2,200 homes and community facilities on north Colchester countryside. Home Group also announced plans to build 4000 homes in 4 years. Further to that, Procure Plus has unveiled a £136m new homes programme in Manchester.

There is another saying that goes along the lines of throwing enough money at a problem can make it disappear. The question is who will throw the money? It has been a positive couple of weeks for housing, but is it a signal that it is the private sector that will step up and bring about growth. Or will the public sector have to do more?

Recent News