The annual Housebuilding Report 2012 from Knight Frank, shows a jump in demand for large family homes. Some 87% of the industry reports a current ‘moderate or high demand’ in the sales market for four- and five-bedroom houses, up from 77% in 2011.

Mortgage finance is rated the single greatest threat to new development, with the majority of survey respondents saying this poses the biggest risk to the sector. While 70% of respondents say the governement’s NewBuy scheme could result in a modest rise in sales, it is some way from being a ‘silver bullet’ to enhance money flowing around the sector. The next biggest danger to growth is seen as a stagnant UK economy and that house builders are also acutely aware of the risks posed by the turmoil in the Eurozone

The report states that housebuilders and developers expect a modest increase in activity with 55% of builders expecting the volume of housing starts to rise in 2012, while more than half saying their site acquisition activity will increase

Almost half of those surveyed said the ‘localism agenda ’could slow down the planning process, while 80% said the New Homes Bonus will have ‘little effect’ on build volumes. Builders also forecast a rise of 3% in construction costs in 2012.

Gráinne Gilmore, head of Knight Frank UK residential research said, “There is no doubt that the industry faces challenges in the current climate. Curtailed funding, planning confusion, onerous levies and economic turbulence mean we are still navigating a difficult period. However there are signs of optimism, and the green shoots can clearly be seen in our survey. We expect development volumes to rise modestly over the coming year, especially in the delivery of larger, family homes.

“Government behaviour will be crucial in maintaining the momentum building in the sector – suggestions from respondents to the Report’s survey questions about what policymakers could do to aid development included reinstating regional building targets and offsetting CIL contributions against Section 106 responsibilities. One respondent put it even more simply, saying what was needed was “a period of consistent policies with no knee-jerk reactions”.