Developers warn of housing shortage

A national survey of 4,500 UK homebuilders by Smart New Homes has revealed 45% of all developers expect a further fall in the number of new developments started in 2009, with a quarter predicting a 50% decline on 2008 figures.

The predicted halt in price decline by much of the industry is likely to be linked to the imminent lack of supply. New home starts have been severely damaged by the credit crunch, and there is little sign of any uptake on these depressed figures in 2009.

Semi-detached and terraced homes were recorded as being in the shortest supply, despite developers reporting that these property types are in the highest demand from homebuyers.

Half of developers are predicting that house prices will stabilise by the end of the year. The majority of respondents believed that the downturn would not last beyond 2010, with some predicting a return to price growth as early as this year.

The majority of respondents believed the worst of the UK house price downturn is now behind us, with half predicting market stability for both new homes and re-sale property by the end of 2009, and 30% predicting a further fall of just 5% for the year as a whole.

David Bexon, managing director of Smart New Homes, said: “The optimistic market outlook from developers is an encouraging sign that we may now have passed the worst of the downturn. Prices are certainly no longer in freefall, with increased activity from homebuyers since the start of the year and early indicators of improvement in the mortgage market, prompting signs of stability.

“Homebuyers are returning to the new homes market, taking advantage of hugely competitive prices and a vast range of incentives to purchase the best of the remaining stock. Key areas of demand, such as affordable family homes are disappearing quickly as buyers seize one of the best ever opportunities to trade up.

“We are facing an imminent shortfall in supply, brought on by the severe lack of new home starts and the Government’s abject failure to boost production of the very homes desperately needed to meet its own targets.”