New homes point to market recovery

Feb 10 2010 by Karen Dent, The Journal

THERE is fresh evidence that the property market recovery may be built on solid foundations after housebuilder Barratt said it will push ahead with plans for 550 new homes in the North East.

The company is opening nine new sites in Tyneside, Wearside and County Durham in the first half of this year at a cost of £92m.

The developments in Chester-le-Street, Coxhoe, Newcastle, Spennymoor, Sunderland, Throckley and Washington are expected to secure 200 workers’ jobs and create more, although Barratt was unable to say how many.

Barratt North East managing director Bernard Rooney said: “There is still strong demand for houses in this region and this is helping the housing market to outperform expectations.

“We would not be making this significant commitment to the market in this area unless we were confident about its prospects in the medium term.

“By building these developments we will be bringing new jobs and creating well-designed, competitively-priced new homes which local people need.”

The £10m Throckley scheme, consisting of 81 houses at The Leazes, is a partnership between Barratt and Your Homes Newcastle, which manages homes on behalf of Newcastle City Council.

Once completed, 36 of the homes will be for rent and 45 for sale. The other eight sites are straight Barratt developments where all the homes will be for sale.

Barratt, set up in Newcastle in 1958, is planning to build 12,000 homes nationally in the current financial year, making it the UK’s biggest housebuilder by volume.

Last year, the company slumped to a loss of £678.9m for the 12 months to June 30, compared with a £137.3m profit the year before.

It has shed some 2,500 jobs since January 2008, when the market went into freefall because of the credit crunch. But since then, it has raised £720.5m from shareholders and taken £651.2m in orders in the last six months of 2009.

Fellow North East builder Bellway said last week that it sold 10% more homes in the six months to January than it did a year earlier and aims to open a further 15 selling sites across the UK this year.

But most of the £76m it has spent on land in the last six months is in the south of the country, and Bellway admitted it remained cautious because first time buyers are still facing difficulties in securing a mortgage.

Meanwhile, figures from the Royal Institution of Chartered Surveyors (RICS) revealed house prices remained broadly flat in the North East last month.

But surveyors in the region remain confident that both prices and sales will increase this year.

Richard Sayer, director at estate agents Rook Matthews Sayer and North East RICS spokesman, said: “Activity has started to pick up since the middle of January and the poor weather. We are experiencing increased home mover confidence with more new applicant registrations and valuations taking place.

“Prices have remained stable for many months and the canny North Eastern home mover now understands that they will not fall further and interest rates will not remain low indefinitely.”