Builders warn on mortgage impact

The prices for new houses have fallen sharply

Two of the UK's largest housebuilders have said that lack of availability of mortgages is continuing to hamper the recovery of the UK housing market.

Both Redrow and Barratt Developments said that while the market had stabilised, would-be buyers were still struggling to get finance.

The two firms reported sharp falls in selling prices in the year to 30 June.

Redrow also said the "extreme" trading conditions meant its profits would be at the lower end of expectations.

However, it reported a "relatively stable" sales market over the past six months, with private home sales up by 22% to 600.

Redrow said its average selling price was £137,500 - down 12.4% from the previous year. Barratt's average selling price fell 14% in the same period to £157,000.

Key issue

Redrow said that the drought in the mortgage market was "without doubt... a major obstacle to the recovery of the housing market".

"We are of the view that resolving this issue can play a significant role in a recovery of the economy as a whole."

Barratt said visitor levels were up 11.9% in the second half of its trading year compared with the previous six months. The level of weekly private sales reservations was 18.6% higher year-on-year.

Earlier this month, the UK's largest housebuilder by volume, Persimmon, said its prospects were better than this time last year.