U.K. Home Registrations Show 'Worst May Be Over,' NHBC Says

Source: www.bloomberg.com
By Brian Swint
2009/09/19

Nov. 20 (Bloomberg) -- U.K. new housing registrations rose to the highest level since July 2008 last month in a sign "the worst may be over" for construction companies, the National House Building Council said.

The number of registrations to build homes rose to 9,163, the NHBC said in a press release today. In the three months through October, applications reached 24,896, 27 percent more than in the year-earlier period.

The report adds to signs that Britain's housing market is strengthening after prices dropped about a fifth and construction shrank for six quarters. Taylor Wimpey Plc, the U.K.'s largest homebuilder by market value, said Nov. 4 that the average cost of homes on order rose 9 percent from the first half and the market is "significantly better" than last year.

"It is encouraging that this month's figures yet again show steady improvement in house building," Imtiaz Farookhi, chief executive at NHBC, said in the statement. "The worst may be over."

The London area had the most registrations to build new homes, followed by the southeast of England, the NHBC said. In both regions, the totals rose by 24 percent from a year earlier.

Construction slumped 1.1 percent in the three months through September as the economy shrank 0.4 percent in a record sixth quarter of contraction. Andrew Sentance, a central bank policy maker, said this week that the economy will probably escape recession in the fourth quarter.

House Prices

U.K. house prices increased twice as much as economists forecast in October as record-low interest rates and a limited supply of homes buoyed the property market, a report by Halifax showed on Nov. 3. Prices are now down 17 percent from the peak in August 2007, according to the mortgage lender.

The Bank of England this month extended a program to buy bonds with newly created money and make it easier for banks to step up lending. Spencer Dale, chief economist at the bank, voted against the increase in bond purchases in part because of concern they may fuel asset-price bubbles.

"The expansionary monetary stance could spark a renewed increase in asset prices which would stimulate growth but also raise longer-term concerns regarding financial stability," the Organization for Economic Cooperation and Development wrote in a report published yesterday.

NHBC's Farookhi cautioned that the building industry's woes may not yet be over.

"The coming months will be a testing time for the industry and it may be some time before we can confidently say that the industry is in recovery," he said.