Market for new homes 'bearable'

SCOTLAND's troubled housebuilding sector, which has lost a raft of big names over the past two years, has finally stabilised, according to Homes for Scotland.

The industry body expects flat growth this year, which according to chief executive Jonathan Fair, is a positive trend compared to the steep declines of 2008 and 2009.

"We see this year being relatively static. There may be modest uplifts of five or six per cent in activity levels but there will be an overall flat market in terms of (new build] property values," he said. "That's much more predictable and bearable than what we have seen in the last two years. The market hasn't turned but we are at bottom now so we can rebuild over time."

Fair said those housebuilders that have survived the slump are slowly beginning to recruit again.

Homes for Scotland expects one area of growth will be in "mid market" lettings as families who can't afford deposits or who are turned down for mortgages look to rent small new build homes.

Fair said several firms are setting up finance vehicles to invest in this area. "There are groups of people who in the past have always been able to get a mortgage, who won't now, or who might take five or six years to get money for a deposit together. In the meantime, where do they go? They are not going to get publicly funded housing and they'll be too well off to benefit from a housing association home so that's where the mid-market rental sector will be a much bigger part of the mix."

Andrew Mickel, a director of Scots housebuilder Mactaggart & Mickel, said there has been a pick up in activity since the start of the year. "That has enabled us to start thinking about a few new sites again, which we hadn't until very recently."