South of England leads housing market pick-up

Published 06th Jun 2009

The North-South divide is increasing in the housing market, according to Bellway, one of the biggest housebuilders. The company said yesterday that while its sales in the South, particularly in London, were showing signs of recovery, the North was taking longer.

Alistair Leitch, its finance director, said: “The southern markets have held up a lot better. Unemployment and the amount of flats built in northern cities are holding back the North.”

The housebuilder, which has debts of £111 million — smaller than most of its peers — is starting to buy land again.

John Watson, the chief executive, said that there were no “green shoots” yet, although the company was on target to sell 4,200 homes this year. He added: “Everyone who makes an offer now is looking for incentives, from carpets and curtains to stamp duty.”

The biggest housebuilders are applying for £320 million of government funding to resume work on stalled housing developments. Barratt, Persimmon and Taylor Wimpey will have completed their bids for a share of the cash before Monday's deadline.

The Government set aside the funding in the Budget to breathe life back into the ailing construction industry and boost the building of new homes by an estimated 10,000 over the next two years. Property developers have struggled to finance new schemes as money from lenders and new home sales have dried up over recent months, forcing them to abandon partially finished construction sites.

Persimmon said that it had applied for £30 million to resume building on 20 sites. These include Spring Gardens in Shropshire, a 200-home scheme mothballed last year, and Ironstone, also in Shropshire, a joint venture with Barratt and Taylor Wimpey that will create 3,300 homes.

Barratt said that it would use funding to restart work on a 700-home development in Bognor Regis, West Sussex, and the West Hendon Regeneration scheme in North London, among other sites.

Rachael Waring, a Panmure Gordon analyst, said: “Builders need to start building again. They are selling what they have got and there is not much stock left. The problem is they are constrained by debt, so need to look at other avenues. Government money would be the clear route.”

Other smaller developers are also understood to have staked a claim on the money. Winning bids will be announced in July.

Source: ' times '

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