Tim Kellett
PAYdata blog, 21 March 2011

January and February’s mortgage lending figures remain at a low level, according to the Council of Mortgage Lenders and 2011 is predicted to remain ‘challenging’ for the market.  With this in mind, house prices are likely to remain downbeat for much of 2011.

As I have said before, if the wider economic climate improves from the summer, then house prices should follow suit.  This is because there is still a shortage of homes on the market, compounded by a lack of new homes being built.

The Housing market will remain sluggish until lending increases and there is little appetite for new borrowing amongst people who are concerned for their jobs and the wider economy.  However, a number of analysts including the Centre for Economics and Business Research (CEBR) believe that banks will only start to lend in the second part of the year.

Over the past few months, there has been a more positive message about the outlook in the medium to long term.  Indeed, the CEBR believe that the most significant house price rises will come from 2012 through to 2014.

All this only serves to curb housebuilders’ willingness to build new homes.  Despite housebuilders’ attempting to overcome some of the obstacles to new homebuyers, such as offering part-exchanges for existing homeowners or offering their own mortgage deals, the number of new homes being built is still low.

However, the Housebuilding sector has consolidated over the last three years and companies are now positioning themselves for the upturn, when demand for new homes returns.  This is a positive thought, even if house prices do not hit the highs of pre-recession in the next few years.  Perhaps this is a good note to end on!

If you need to benchmark the pay and benefits of your Housebuilding people, participate in PAYdata’s Housebuilding Salary Survey.  Email Tim Kellett at This e-mail address is being protected from spambots. You need JavaScript enabled to view it for more information.

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