Amongst the most serious losers of the ongoing recession have been the UK house-builders. Demand for new houses, despite historically very low interest rates, has plunged. Bullish targets for new UK house-build volumes, such as the Government’s 240,000 new homes per year by 2016 and 300,000 by 2020, have been replaced by unremitting gloom. After all, last year, just 160,000 new houses were built in England, probably around 30% less than actually required.

This pessimism has been reflected in the dramatic decline in the share prices of leading house-builders, most notably, Taylor Wimpey and Barratt Developments. Several house-builders have taken heavy write-downs of their land-banks. Whilst the recession has been a key factor for the decline in new house-building, it has been the disinclination of the banks to lend that has been crucial: the easy lending terms of the past in the housing market have been severely cut back.

No longer do such controversial offers, as Northern Rock’s 125% Togther mortgage, power the market. Instead, leading banks – two of whom, RBS and Lloyds, have received some £37 billion of new equity from the Government – now expect sizeable down-payments for any mortgage deal.

But, out of this gloom for the housing market, there is some evidence that the bottom has now been reached. Persimmon, the UK’s leading house-builder, confirmed in its trading statement of July 7th that sales volumes in recent months have exceeded those during 2008. The Company also indicated that, whilst prices were still declining overall, there was price stability in some UK regions.

The house-builders recognize that any recovery is likely to take time, especially since interest rates are expected to rise over the next 18 months. Some, though, believe that the worst may now be past. However, any recovery in house-building volumes will be way below the Government’s aspirations set out during the boom years.