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A recent survey conducted by British Bankers Association showed a 27% reduction in mortgage offers when compared with the same period last year. In a recent report the IMF indicated that residential property could be overvalued by as much as 40%. The sub-prime fiasco has restricted the availability of mortgages in the sector, particularly around apartments and flats, and there has been a significant fall in housebuilder share price. Are we heading for meltdown?

Balance these gloomy statistics with the fact that the government has put housing supply right at the top of their agenda 鈥� housing targets have increased by over 42%, and the recent report produced by the National Housing and Planning Advice Unit that challenged these targets arguing that they are too conservative and putting the case for even more homes and the raw statistics of 鈥渉ousing need鈥� that shows an increasing requirement across all housing types and tenures, then you have market pressures that plays to the basic rule of economics, namely demand will always fuel supply.

Of course there is the question of affordability. Recent statistics show a significant jump in mortgage to salary ratios from four times in the 1990s to seven times now. This will create financial pressures for home owners. However, fundamentally the demand is still there.

The opportunity, therefore is to be innovative in the way the product is brought to the market and beyond. This could mean looking at new business and operating models for developers, considering different tenure solutions, creating beneficial public/private partnerships, efficiency modelling around the capital asset and long term asset ownership and management.

Add to that the government initiatives around land supply {the release of surplus MOD, NHS land etc} and the incentives payments available to councils for growth in housing delivery and the real opportunity is apparent.

It could be argued that the boom conditions experienced in the residential sector over the last few years has hidden bad management and inefficient practices in some of the housebuilder organisations. The opportunity now is for the industry leaders, for the organisations that are willing to differentiate, to do things differently and embrace the market conditions that influence the provision of housing.

Make no mistake the residential sector is in for fundamental change over the next few years, the challenge is in how the industry embraces that change.