Britain’s biggest housebuilders have called a recovery in the housing market for the first time in six years as easier lending conditions and greater consumer confidence boost sales.
Taylor Wimpey, the UK’s biggest housebuilder by homes sold, said the housing market had “shown measurable improvement for the first time since the downturn of 2007-08”. Rivals Redrow and Galliford Try echoed the bullish sentiment, with both companies indicating that they expected record results this year.
The bullish forecasts will add to concerns that the government’s controversial Help to Buy scheme is fuelling another house price bubble.
Pete Redfern, chief executive, became the first housebuilder to suggest that the government needed a clear exit from the scheme, which is set to run for three years and lends purchasers 20 per cent of the cost of a home.
“Let’s not assume this measure should be here forever,” he said. “Let’s have a plan that says it should be here for maybe two to three years and then be sensibly withdrawn, rather than taken away overnight. So if it’s managed properly I think the risk does not concern me, but you need to plan how you’re going to manage your way out of something you start sometimes, I think.”
Critics including the IMF and the government’s own Office for Budget Responsibility have argued that the subsidy risks inflating property prices and creating heavy losses for the state. Although the first part of the scheme was introduced in April, it will be extended to existing homes from January.
The buoyant state of the wider market was also underscored by the latest figures from Halifax, which said prices in the quarter to June were 3.7 per cent ahead of a year earlier, the biggest increase since August 2010.
The strengthening of the housing market enabled Taylor Wimpey to suggest it would reverse some of the losses it chalked up in the wake of the credit crunch.
The housebuilder was created in 2007 through a £5bn merger at the peak of the housing boom, but almost collapsed under the weight of its £1.7bn debts. On Thursday Taylor Wimpey said conditions had improved to the extent that it expected to unwind some of the £1.3bn writedowns it took on the value of its land in 2008 and 2009.
Anthony Codling at Jefferies, the investment bank, said: “If ever we need proof that the housing market is recovering, we have it now. Whilst we expect the quantum to be small, the symbolism is quite the opposite.”
Taylor Wimpey completed 5,192 homes over the six months to end-June, with the average selling price rising to £187,000 from £176,000 in the prior year. Around 1,000 purchasers have used the Help to Buy scheme. Operating profit margin in the UK was more than 13 per cent, up from 11.2 per cent a year earlier.
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