UK builders 'drip-feed' market to slow price fall

Housebuilders in Britain are "drip-feeding" homes on to the market to prevent further falls in prices, claimed industry analysts. They said the practice – to avoid flooding the market – was widespread among large-scale builders such as Barratt and blamed a lack of competition among the developers of large sites for the problem, according to The Times. Yolande Barnes, Head of Research at Savills, the estate agency and property adviser, said: "The business model of housebuilders is to deliver a certain rate of sales at a certain price in the short term. This is partly because if you have a large site with thousands of similar homes, you can only sell so many of one type before you flood the market." Recent research by Savills indicates that of 29,000 new-build units in London that are either under construction or finished, around one third are not yet up for sale and only 916 are vacant and ready to be occupied – equivalent to two months' supply, according to Savills. Greater competition between developers on site would mean that houses would come to the market more quickly, Wayne Hemingway, the housing designer, said. "For one developer to have control over a large building site is like a high street where Woolworths is the only shop. The result is a mono-culture of identikit homes, which can be drip-fed on to the market." The critical comments coincide with the publication of a report that will warn of a long-term housing shortage. The National Housing and Planning Advice Unit (NHPAU) will say that steps to close the gap between supply and demand for housing must be taken "or the consequences for individuals and families will become increasingly severe, with wider economic and social impact". The report will say: "Recessions do not have a big impact on the number of households wanting homes but they do lead to a sharp drop in the number of homes being built." A spokesman for Barratt said: "We are always trying to match supply with demand." Housebuilding in England fell by 44 per cent in the first quarter of this year compared with the same period last year, official figures show, with housing starts down by 42 per cent to 90,430 in the year to April 2009. Britain's biggest housebuilders have said that they are planning to start work on new sites as signs emerge that the market is beginning to improve. Keep up with the latest business news from the region with the daily Emirates Business 24|7 newsletter. To subscribe to the newsletter, please click here .