Mortgage availability crucial to UK stability

London : The UK's largest privately owned housebuilder said the availability of loans to homebuyers would be a crucial ingredient in a return to a stable housing market.

Delivering an upbeat trading statement for the year to December 31, Miller Group, the Edinburgh-based building, construction and property company, said it was seeing a gradual improvement in the housebuilding market in spite of a demanding economic environment.

Transaction volumes for the year were 35 per cent ahead of 2008 levels, with a pick-up in the second half, while forward sales of £108m (Dh646 million) represented an increase of 104 per cent compared with 2008.

Housebuilding has been among the industries worst affected by the economic slowdown, with low consumer confidence and a lack of mortgage availability causing sales to dry up. And while the market is improving, data published by the Royal Institution of Chartered Surveyors this week indicated that the number of properties being sold was still a third lower than at the beginning of 2007.

"Volumes are low but the demand has fallen a long way as the money to buy is not as readily available and the balance with supply is now much more in line," said Keith Miller, chief executive.

"However, if we are to see any degree of long-term stability, it is crucial that the housing market gets a continuing supply of mortgages," he added.

The company said its construction business was performing well and that it would report healthy profit margins, which it expected to come in slightly better than last year.

Unlike some of its rivals, Miller has been keen to avoid signing up to low margin, or even lossmaking contracts in a bid to generate turnover and utilise its workforce.

"We don't have our heads in the sand but we don't want to slash margins just to bring in work and then end up damaging our relationships," said Mr Miller.

The group, which had turnover of £622m in 2008, also said its diverse range of construction activities meant it would be able to take advantage of the few areas of building work that were likely to see an injection of government money following a general election.