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The residential property market is set for recover

7th April, 2009

The residential property market is set for a recovery which will be driven by a shortfall in new homes.

That’s the view of Clive Benfield, the chairman of the Coventry-based KB Benfield Group – which includes Benfield Homes and Fletcher Homes (Shropshire) – who says recent statistics prove that more new homes need to be built to meet demand rather than less.

The market is already showing initial signs of a recovery but Mr Benfield believes more needs to be done to free up the supply of mortgage finance if the UK is to meet demand. That would create more buyers and, therefore, homebuilders will create more new homes.

The Department for Communities and Local Government predicts that the number of households will rise by 252,000 a year between now and 2031 – equating to a 29 per cent increase.

But just 70,000 new homes are expected to be built in 2009 while only 165,000 were built in 2007 before the credit crunch factor kicked in.

The recovery in the market will inevitably be followed by price rises because of the shortfall, said Mr Benfield.

He said: “I have seen surveys indicating that prices are beginning to stabilise – added to that our own anecdotal evidence on site, where we are seeing a greater number of potential purchasers.

“The market is closing in on a recovery and if mortgage finance got back to some semblance of normality, that might speed the process up.

“But the vast difference between the number of houses needed and the number being built can not continue.”

Mr Benfield's comments come just days after figures showed the number of mortgages approved for house buyers increased for the third time in a row.

A total of 28,179 loans for people buying a home were approved during February, up from 24,278 in January and a low of 17,878 reached in November, the British Bankers Association said.