Analysis: The UK housebuilding industry is, at least for now, enjoying some summer sunshine. Persimmon delivered an upbeat trading statement for the first half of the year on Tuesday.

The UK housebuilding industry is, at least for now, enjoying some summer sunshine. Persimmon delivered an upbeat trading statement for the first half of the year on Tuesday, while Barratt Developments and rivals Redrow and Galliford Try said yesterday that the construction sector was stabilising after a long period of sinking prices and depressed profits.

The economic slump - the worst since the 1930s - hit the Scottish housebuilding industry hard during the past year. Experts say about 26,000 housebuilding jobs have been lost and much new development across the country is effectively on hold. Scottish new-build housing output has plummeted, according to Homes for Scotland, the representative body for the Scottish homebuilding industry. Some builders closed or merged sales outlets north of the border and stopped banking land for development.

A recovery in home building in coming months will, however, depend on whether the banks will open their vaults and make cash available to potential buyers - especially those hoping to purchase a property for the first time - and also on the levels of unemployment during the next 12 to 18 months. Few people will be willing to shell out thousands of pounds in a down-payment for a flat or house if they think they may end up in a dole queue during the next year or so.

City economists say there are signs of improvement but remain cautious on prospects for the industry.

Howard Archer, chief UK and European Economist for consultants IHS Global Insight, said: "We believe that the pick-up in actual house purchases is likely to remain relatively gradual for some time to come, given ongoing tight credit conditions and still relatively poor economic fundamentals - even allowing for the recent signs that the economy may be currently near to stabilising.

"Elevated and still markedly rising unemployment, muted wage growth and a reluctance of many people to actually commit to buying a house when they still have serious concerns about the outlook are all factors that are likely to continue to limit the upside for the housing market for some time to come."

He added: "It continues to be very difficult for many people to get mortgages, particularly first-time buyers - and this situation is likely to improve only gradually. Indeed, price comparison website Moneysupermarket.com reported that the number of mortgage products on the market has fallen to the lowest level on record at 2282.

"For first-time buyers, it is even lower at 1195. To put this into perspective, there were more than 30,000 products in August 2007, with more than 20,000 for first-time buyers. Furthermore, interest rates for some fixed rate mortgages have risen from their lows due to money markets pricing in future interest rate hikes by the Bank of England."

The central bank left base rates on hold at the record low of 0.5% yesterday but this is little help to builders if the banks restrict lending.

Jonathan Fair, chief executive of Homes for Scotland, said: "Continuing record low interest rates are no doubt an aid to stabilising the general economy at a time when consumer confidence appears to be returning.

"However, despite increasing levels of interest in buying new homes, the stumbling block to converting this into sales remains the difficulties many people have in trying to secure a mortgage.

"Constantly changing lending criteria, disparity between new-build and second-hand home valuations and reducing loan-to-value ratios are making a mockery of the government's desire to get credit flowing again. Whilst appreciating the conflicting demands facing lenders, we must act jointly to resolve such uncertainties immediately."

Barratt and Redrow, two of Britain's biggest housebuilders, hammered the message home about the need for more lending in yesterday's trading statements, warning that signs of stability in the market were being undermined by banks' reluctance to provide mortgage finance to borrowers Barratt said that it had witnessed a return to the traditional spring selling season this year for the first time since 2007. Visitor levels to new home developments rose by 11.9% in the six months to June 30 compared with the previous six months.

Redrow also detected a "rela- tively stable" market over the past six months, with private home sales up by 22%.

However, Barratt and Redrow said a lack of mortgage finance was impairing recovery. Mark Clare, group chief executive of Barratt, said: "The market is shut for an awful lot of people. It has removed the opportunity (for many people) to buy their first home."

Redrow also sounded a note of caution on the mortgage market, stating: "Without doubt this is a major obstacle to the recovery of the housing market and we are of the view that resolving this issue can play a significant role in a recovery of the economy as a whole."

Despite growing concerns over the availability of finance, Barratt and Redrow echoed positive sentiment from Persimmon earlier this week when it revealed signs of stability in the housing market and a steep fall in cancellation rates. Barratt said cancellation rates for new homes have fallen to just under 20% in the first six months of 2009, down from 37.4% in the equivalent period of 2008 Clare said the market had stabilised chiefly because of a shortage of available new homes: "Stock levels are pretty anorexic at the moment." Nevertheless, he said the market was stabilising rather than recovering with total sales for the year to June 30, down 29% to 13,202.

Redrow also detected a "rela- tively stable" market over the past six months, with private home sales up by 22%.

Galliford Try, which owns Morrison Construction in Scotland, also issued a mainly upbeat statement, saying it saw encouraging signs for a second-half recovery.

UK house prices have plunged by 20% since the start of the economic downturn last year. This week, Halifax reported a 0.5% fall in house prices in June, compared to the previous month. In the three months to the end of June, house prices dropped by 1.9%, the smallest quarterly fall since the first three months of 2008.