Conflicting messages about the Housing Market
It seems there have been some conflicting stories in the press recently about the state of the new build housing market and the performance of the housebuilders.
Before looking at a few of the things being said, as Planners and property consultants where we advise on planning strategies with housebuilders and owners as well as sell land to them, our message is that the market remains strong.
We see strength in land values as these now ‘hold up’. We see a widening geographical appetite for housebuilders to trade and build where they haven’t been for some time. Finally we see a strong appetite for looking at new land and ‘situations’ the latter mainly being office to residential conversions.
One of last weeks strongest positive messages was that Barratt Homes had doubled their profit and quadrupled their dividend – not bad! A good sound bite was that the company had “increased its stable of future development sites with a 4.7 year land supply”. Much credit was also placed on the ‘Help to Buy’ scheme.
The words of caution have also been express of Berkeley – too however. Two veterans of the residential market – Steve Morgan of Redrow and Tony Pidgley have been saying over the last few weeks that caution is now necessary. Pidgley said that “if the cost of buying land rises to half the price you are going to get for the unit, then you’ve got a hot land market”. He seems to say we may have a ‘bubble’.
The RICS has been commenting too, that the number of house sales fell for the first time in nearly 2 years in August. An explanation was that the concerns over a rise in interest rates are weighing on buyer confidence.
There are clearly some great variations between the regions and the Central London market, which, by most commentators view, has overheated.
It seems as though the residential market is perhaps at something of a plateau now but let’s trust it stays at that, and we don’t see any “ice buckets” of sudden interest rate rises thrown over us all.