Measures have been taken to support the housing industry, but uncertainty about the outlook is taking its toll
With the launch of the housing strategy, the housebuilding industry took centre stage in November.
By announcing initiatives to increase affordable mortgage supply to borrowers with small deposits and money to kick-start stalled development, the government has signalled its support for the industry. However, unease about the state of the economy is mounting and the CPA/Barbour ABI private housing index shows contract awards fell for the third consecutive month in November.
At 104, the index was only 1% lower than in October, but compared with November 2010 it contracted significantly, by 14%. Uncertainty about the near-term outlook is once again taking its toll on housebuilding.
A new build indemnity scheme, designed to help people with a 5% deposit buy a new build property at a reasonable interest rate and jointly shouldered by housebuilders and the government, was headline news. With the government’s liability capped at £1bn, the scheme could insure up to 100,000 mortgages.
However, the scheme’s success will be judged on its ability to encourage lenders to increase lending, as opposed to diverting funds elsewhere, probably to borrowers with a higher deposit. Details about the £400m Get Britain Building fund have yet to be revealed.