The UK housebuilding sector could be heading for a new crisis with £7bn of debt due to mature in 2011 and 2012, a new report has warned.
House prices have recovered this year and house builders have raised £1.7bn of new equity to shore up their balance sheets, but Fitch, the credit rating agency, believes this threatens to be a 'false dawn' which masks 'potentially serious problems'.
The report says house builders may only be able to pay down limited amounts of debt in the run-up to 2011 and 2012 because they will be investing in new land and developments, but will not see any boost in revenues or margins as house prices struggle to recover. Fitch believes values will fall 30% from their October 2007 peak. At present that fall is just 13%, after a recovery this year.