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New homes market set for growth despite gloom

Wednesday, 7 December 2011 11:07 AM

Demand from first-time buyers will support the market for new homes in 2012 despite the wider economic gloom, says SmartNewHomes.

The website says the underlying demand will come from first-timers backed by the government's FirstBuy and mortgage indemnity schemes and who may have been saving for a deposit for the last four years.

However, new home starts will remain low, at around 120,000, because the increase in planning approvals expected from the National Planning Policy Framework will not come through until the second half of the year.

Until then, it says, the current stagnation in the planning system due to uncertainty among developers and planners will continue to hinder projects for new homes.

Steven Lees, director at SmartNewHomes, said: "Housebuilders are facing further uncertainty as we approach 2012, with spending cuts, rising unemployment and downgraded growth forecasts impacting consumer confidence, but the majority of housebuilders have streamlined their operations and are in robust shape going forward.

"They are building in smaller volumes in areas where there is a proven strong demand, selling quickly before moving onto the next project to limit exposure.

"We are hopeful that government planning policy and investment in development will enable housebuilders to increase volumes, create jobs and provide a much-needed boost to the economy next year."

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