By Lorraine Turner
LONDON (Reuters) - The UK's housebuilding sector is emerging from the doldrums of 2009, but a raft of results on Wednesday showed that any rebound will be muted by the uncertainty of the macroeconomic picture and weakness in mortgage approvals.
The UK's largest housebuilder, Barratt Developments gave a bullish forecast for its operating margins in the second half of the year as it reported improved trading in its first half and rising average selling prices.
This was supported by comments from construction and housebuilding firms Galliford Try and Kier Group which said that prices not only stabilised, but climbed in some areas, underpinned by a lack of new housing. Galliford's Chief Executive Greg Fitzgerald told Reuters that prices at a number of sites in the south east had returned to pre-crash levels of pricing in 2007.
Urban regeneration specialist MJ Gleeson said there are signs of "a modest improvement in house buyer interest" since the year end, but warned it is still too early to tell if it signals a sustained recovery.
Indeed, mortgages remain the thorn in the side of the residential recovery.
"Of course further recovery does rely on the all-important mortgage finance ... The biggest issue today is the way new-build and second-hand homes are dealt with by lenders," said Barratt's chief executive, Mark Clare, on a call with journalists.
Santander Group, the UK's second-largest mortgage lender, unveiled plans on Wednesday to lift the maximum loan-to-value on new-build mortgages in the UK from 80 percent to 90 percent on homes, a move which Barratt's Clare described as "very good news," but he added that this needs to happen across the sector.
New data on Tuesday showed that mortgage approvals slumped in January to an eight-month low of 35,083 in January, from a 26 month-high of 45,650 in December, with activity dampened by bad weather.
Bank of England policymaker and house market expert Kate Barker added on Tuesday that the housing market may dip again as mortgage financing continues to be held back, and is likely to stay weak through the year.
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Fears about the strength of the UK's economic recovery grew last week after January retail sales data came in weaker than expected, raising the possibility that the economy could contract in the first quarter of this year, having only just exited recession
The chief executive of British builders' and home improvements supplier Travis Perkins warned on Wednesday that markets will not grow until at least the end of 2010, despite having stabilised.. The company reported a 11 percent drop in full-year profit, with the country's upcoming general election likely to dent consumer confidence further, CEO Geoff Cooper added.
Uncertainty surrounding the outcome of the election is also likely to weigh on demand for new houses during the key spring selling season for UK housebuilders, as well as fears over unemployment, after the number of Britons claiming jobless benefits jumped unexpectedly in January.
The opposition Conservative Party, which released its planning green paper on Monday, indicated it will radically alter the planning system, heightening fears that already-low levels of supply will be choked further.
"The Tory planning policies will bring in uncertainty, for a couple of years, which will mean that housebuilders, because of localism will find it more difficult to get planning permission on land, which will in turn mean that the current level of housing completions will remain compressed," Greg Fitzgerald, Galliford Try's chief executive told Reuters.
Barratt's Clare added that he backs the industry forecast of improved volumes in 2010.
Shares in Barratt were down 1.81 percent, Galliford Try were up 0.15 percent, Kier shares rose 0.5 percent and Travis Perkins were down 4.33 percent at 10:50 a.m..
(Editing by Rupert Winchester)