The UK housebuilding market will rise by 154,000 homes in 2010, according to a new report from MTW Research, though housebuilder expenditure remains under tight control as social housing investment slows and business confidence returns slowly.

Based on industry sales, the new report identifies a growing optimism amongst housebuilders in April 2010, with house prices stabilising in the first quarter of 2010 and demand returning as the mortgage market eases and lending increases. Sales of new homes will exceed £25 billion in 2010, according to MTW, with the housebuilding industry forecast to grow sales to more than £29 billion in 2011 as the UK economy gathers strength.

The social housing market has underpinned the housebuilding industry during the last 2 years, with new affordable housing built for housing associations now accounting for almost 20% of the UK housebuilding market in 2010, up from 11% in 2004. MTW also point to government schemes such as the £500 million 'Kickstart' programmes as having supported the industry, generating an additional 5,000 new social homes by the end of 2012. The report also identifies a number of fundamental changes in the social housebuilding market in 2010, such as a return to more traditional 2 storey house building, enabling housebuilders to maintain tighter control of costs and decrease build times.

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The rate of growth this year will vary across the UK, according to MTW. Housebuilding activity in England is forecast to rise by around 5%, though levels are still well below the peak of 152,500 recorded in 2007. Scotland is the second largest country in the UK housebuilding market, accounting for around 11% of the total UK market with housebuilders in Scotland set to increase output by around 4% in 2010. Domestic new build activity in Northern Ireland is currently estimated at around 7,300 units, reflecting a forecast increase of around 3% to year end December 2010, highlighting the slower levels of growth forecast in this country than other UK regions. Completions in Wales are set to rise by 5% in 2010, having declined by some 40% since the peak in 2006 of just under 9,000 units.

(CD)