the flow of new private housing applications and approvals remains extremely weak as housebuilders use the modest improvement in market conditions to build out existing sites rather than bring new schemes forward for development.
Planning approvals during the first nine months of this year were running at half the level of year ago. Furthermore house builders are submitting few new schemes to the planning authorities; private planning applications during the third quarter were 38% down on a year ago, pointing to no early recovery in approvals during the closing months of 2009.
Most of the major housebuilders have been raising additional capital over the summer, with Barratt among the latest to announce a rights issue in order to cut their borrowing and provide funds for discounted land purchases. However, whilst some housebuilders are now looking to add to their landbanks, the latest data suggests that there will be no rush to bring forward acquired sites for development.
Against this background, the outlook for the private housing sector remains harsh. Near term housebuilders will remain focussed upon reducing their work in progress and their stocks of unsold completed dwellings. We anticipate that the value of underlying projects starts will fall by 39% this year and we are forecasting only a modest improvement in sector starts during 2010.