The residential property market in the UK in 2012 will be challenging, but the streamlined new homes market is robust and well positioned to weather the wider economic storm, it is claimed.
A strong underlying demand for new homes is being hampered, however, by uncertainty amongst developers, planner and local authorities, according to SmartNewHomes.
New home starts are expected to remain low, in the region of 120,000 units over the course of the year, with an increase in planning approvals anticipated in the latter half of the year when the NPPF (National Planning Policy Framework) comes into effect.
Until then, the current stagnation in the planning system is expected to continue and average new home prices will experience nominal growth, in the region of 2 to 3% over the course of the year.
SmartNewHomes anticipates that first time buyers will make a noticeable return to the market next year, supported by government schemes such as FirstBuy and the recently announced mortgage indemnity scheme, which enables them to buy a home outright with a 5% deposit.
It is possible that those first time buyers who were about to buy when the recession began and mortgage products were withdrawn, have in many cases been saving for the last four years and now have a sizeable deposit which will put them in a good position to buy next year.
‘House builders are facing further uncertainty as we approach 2012, with spending cuts, rising unemployment and downgraded growth forecasts impacting consumer confidence, but the majority of house builders have streamlined their operations and are in robust shape going forward,’ said Steven Lees, director at SmartNewHomes.
‘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,’ he added.
He believes that the government is recognising that there is a major opportunity for the UK to build its way out of recession, which is reflected in planning policy, housing strategy such as the Get Britain Building Fund and its commitment to major infrastructure projects announced in the Autumn Statement.
‘We are hopeful that Government planning policy and investment in development will enable house builders to increase volumes, create jobs and provide a much needed boost to the economy next year,’ he added.