Housebuilder warns of mortgage famine

NUMBERS of house sales will continue to drop even lower and the UK is at risk of a “mortgage famine” unless the government acts to boost the market by helping buyers to take out loans, said the housebuilder Redrow yesterday as it announced its third quarter results.

“Deliberately suppressing housing demand at the very time that the country has a chronic housing shortage is laying the foundations for the next boom/bust cycle,” said the firm’s chairman Steve Morgan.

“The way to end the cycle of boom and bust is to increase the supply of new homes to meet the demand by freeing up the supply of affordable mortgages. The regulators are going too far and the medicine risks killing the patient.” Despite the gloomy outlook about the industry, Redrow announced that private home sales in the financial year to date were nine per cent up on the same period last year at £133m and that the average house price went up 16 per cent to £174,000, which reflected the company’s launch of its Heritage Collection, estates of 1920s Arts and Crafts-style family homes that it has built around the country. Its shares closed up 2.9p at 112p on the news.

Redrow said that although the economic climate has obviously affected the demand for houses the underlying demand remains strong. Morgan said that the firm was having to turn away potential purchasers who were not able to raise the deposit of 25 per cent or more.