The housing market continues to strengthen according to latest figures, giving an incentive for housebuilders to maintain investment in new land.
Residential construction outfits like Bovis (BVS), Persimmon (PSN) and Redrow (RDW) have assured investors over the past week that they continue to augment their land banks at rates well above replacement rates. On the face of it, this certainly makes sense in a market where land prices are set to rise by an average of 4.5% per annum over the next five years.
When Redrow, for example, posted an interim management statement on 11 November, it revealed that ongoing landbank investment has seen 2,000 new plots added since the start of the financial year.
The Royal Institution of Chartered Surveyors (RICS) reports today that 57% of chartered surveyors reported residential house price rises in October, touching its highest level since June 2002 as demand outstripped the number of properties on the market.
This was up from September's revised 53% and has prompted some economists to wonder whether or not another bubble is being inflated in the housing market as government schemes like Help to Buy facilitate a greater ease in accessing the mortgage market for those buyers who don't have the huge deposits being demanded by lenders.
As always, there's conflicting messages on the true health of the industry. New data today from the Office for National Statistics implies a recent drop in monthly house prices. Its index fell from 186 in August to 184.9 in September. It still claims annual UK price growth continued to increase thanks to larger falls in property prices in September 2012. Yet that's merely a factor of easy comparative numbers to beat.
One of the major concerns about the UK housing market continues to be the north-south housing divide which often looks more like a yawning chasm than a regional variation.
The recent RICS data illustrated the breadth of that divide with RICS headline net prices for London standing at 100 with the South East increasing to 80 from 78 in September against a national average of 57 in October which was up from September's 54 print. So while for some, the takeaway continues to be that unsustainable regional discrepancy, it is worth bearing in mind that every UK region saw a positive number for only the second time since 2007.
