Stable fundamentals mean outlook is positive
February also proved to be a relatively buoyant month for contracting activity within the private housing sector. At 124, the private housing contract awards index was marginally lower (-2%) than in January but was up 39% from February 2011.
Boosted by the stamp duty holiday, which ends this month, mortgage approvals and property transactions increased strongly early this year. Allowing for this, however, housing market fundamentals are broadly stable. Housebuilders report increased interest in newly built homes and modest price growth.
With market fundamentals stable and the launch of the government’s NewBuy mortgage indemnity insurance scheme, which will improve market liquidity by enabling first-time buyers and movers with low deposits or little equity to secure mortgages at more attractive rates, the outlook for 2012 is promising. Growth will, however, be from a low base and the number of units delivered, while higher than in 2011 and a big improvement on 2009, is anticipated to fall sorely short of household formation projections.