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Leading UK residential property builders hit out at banks

Barratt Developments, the UK's second-biggest house builder by volume, and Redrow, another major homebuilder, both reported further decline in sales volumes although Barratt said it believes the situation is stabilising.

Redrow reported that sales volume had fallen 46% and average prices declined by 12%. Barratt said average selling prices of private homes declined 19% during the year, but said that in the second half it had achieved 'adequate sales volumes' at planned prices.

'In the recent six months we have seen higher sales rates, lower cancellations and prices leveling,' said Chief Executive Mark Clare.

But he added; 'We are not, however, going to see a sustained improvement in trading conditions until the availability of mortgage finance, particularly in the higher loan to value segment, recovers.'

While Redrow said it was reassured by signs of stability, it complained about 'chronic shortage of mortgage supply exacerbated by the widespread practice of down valuations by surveyors representing mortgage lenders. Without doubt this is a major obstacle to the recovery of the housing market'.

Bovis Homes said that there is renewed interest in their developments but potential buyers are still unable to secure a mortgage. Persimmon reported a decrease in cancellations and an increase in reservations but also hit out at the lack of lending. 'We are encouraged by the improvement in sales rates when compared to last year but will remain cautious until mortgage availability improves further and employment prospects stabilise,' the company said.

Net mortgage lending in the UK hit an eight-year low of £2.3 billion in May, according to the British Bankers' Association.

The mortgage market has been particularly tough on first time buyers, with lenders increasingly reluctant to advance more than 75% of the value of a property. Although there are signs that this may be easing for some customers. Nationwide, the UK's largest Building Society is introducing a 125% mortgage for existing customers who are in negative equity and need to move.

And the latest figures from the Council of Mortgage Lenders show that lending criteria stopped tightening in May. 'We might expect to see a modest easing in these measures over the summer as some higher loan-to-value products came on to the market in recent months and lenders reported that they intend to increase lending at higher loan-to-value ratios,' it said.

But it also revealed that more first time buyers are having to get help from their parents as they cannot afford the large deposits lenders are demanding.