A weekly news summary covering all aspects of the housebuilding industry. Available to members only.
Mortgage approvals stabilise
The Bank of England’s lending data revealed that the number of loans approved for house purchase edged up to a seasonally adjusted 85,000 in February, from 82,000 in January. While this is 32% lower than in February 2004, approvals have been almost unchanged over the last three months after sharp falls from May to September last year. (http://www.bankofengland.co.uk)
Nationwide report a fall in house prices in March….
Nationwide reported that house prices fell by a seasonally adjusted 0.6% over March, the largest monthly fall since July 1995. Consequently prices now stand 7.9% higher than a year ago, down from 10.2% in February. However, Nationwide reported a 0.5% increase in February and prices are actually up slightly since the end of 2004. Chief Economist Alex Bannister said “Looked at in context it confirms our view that the market is experiencing a soft landing.” (http://www.nationwide.co.uk)
… while Hometrack report signs of stabilisation
Website Hometrack reported that house prices fell by -0.1% in March, the eight successive monthly fall but the smallest drop for over six months. The average sales price as a percentage of asking price edged up to 93.4%. Hometrack commented “All signs now point to an end to house price deflation with price rises continuing for the balance of the year.” (http://www.hometrack.co.uk)
OFT’s Annual Plan 2005/6
The Office of Fair Trading released their annual plan for 2005/6, reiterating the message from the previous year’s plan that construction and housing markets, including services related to them, are amongst five key priority themes. (http://www.oft.gov.uk)
Slight increase in February housebuilding rates
Latest NHBC statistics show a 1% increase in housebuilding completions for February, compared with the same month last year. Combined public and private sector completions totalled 11,939 dwellings, and new housing applications totalled 14,678 – a 22% increase on the number of applications made in January.
“Overall, these figures demonstrate stability within the new housebuilding industry,” said NHBC chief executive Imtiaz Farookhi. (http://www.nhbc.co.uk)
Labour to “boost home ownership”
Chancellor Gordon Brown will pledge to create one million more home-owners within five years of an election year. The pledge will come while unveiling plans to build 15,000 homes for first time buyers on former NHS sites. The Chancellor wants to make Britain “the home owning and wealth owning democracy that people will look to around the world.” (http://news.bbc.co.uk/1/hi/uk_politics/4399463.stm)
Design for Manufacture Competition
English Partnership (EP) announced details of the Design for Manufacture Competition along with four sites that will be used to pilot the construction of “sustainable, well designed, good quality homes for around £60,000”.
EP’s director of corporate strategy, Trevor Beattie, said “This competition will stimulate fresh thinking in the way we construct our homes and demonstrate how we can build more cost effectively without sacrificing quality.” (http://www.englishpartnerships.co.uk)
Minister unveils “green business scheme”
Environment minister Elliot Morley unveiled a £284m Business Efficiency and Waste (BREW) program to plough back cash from the landfill tax back into business support. The minister said “A wide range of industries, from manufacturers to retailers, can save literally billions of pounds a year by cutting waste and improving resource efficiency, often with little or no investment.” (http://www.epolitix.com)
Strong Results from Kier Residential in second half of 2004
In Kier Group’s interim results for the six months to 31 December 2004, results from the housing arm, Kier Residential, showed a 48.8% increase in profit to £19.2m, compared to the corresponding period in 2003, on turnover of £134.5m. Housing completion increased 28.3% to 721 units.
Linden North West sold in management buy-out
The Linden Homes Group has sold Linden Homes North-West to the local management team, in a deal worth more than £17 million. The MBO team was led by Andy Brown and supported by John Cosgrave, formerly MD of Alfred McAlpine Homes North-West.
Philip Davies, group chief executive said: "The North-West Company was started by the Group in 1994 and has firmly established itself as a key regional player. However, it is disconnected from all the other regions and so a management buyout from Andy Brown was felt to be the most sensible option.
"We wish him and his colleagues every success. For the next two years they will retain the Linden name and maintain their presence on our website."
Barratt in confident mood
Barratt has announced strong pre-tax profits of £171 million for the six months to the end of December. Turnover increased to £1.18 billion as forward sales increased by 6%.
Chief executive David Pretty said Barratt had a record £1 billion order book and already had forward orders for 90% of its sales target for the year. He also said that the company was on track to meet full year unit sales forecasts of 14,500, up 500 on last year, including approximately 2,000 social units.
Wimpey announces strong growth on back of cautious approach
George Wimpey’s results to the year-end 2004 show pre-tax profits up 19% to £450.7 million and operating margins up 17.1%. The strong set of results for Britain’s largest housebuilder continue a four-year growth trend for the plc, assisted by a careful approach to spending and land buying.
Chairman John Robinson said: “The past four years have been years of remarkable growth, in which we have taken a number of very important management decisions to secure the long term success of our business. We believe these actions have placed George Wimpey in a stronger position from which to respond to the changing conditions we have experienced since the UK housing market started to slow during the second half of 2004. In the UK our focus on cost control and careful land buying will help us sustain the improvement we have achieved over the past few years in our operating margins.”
Strata announces record profits
Housebuilder Strata has announced record results for the fifth consecutive year with an impressive 26% increase in pre tax profits from £10.4 million to £13.1 million. Chairman Irving Weaver said: "Our results reflect our passion for design alongside our reputation for reliability and innovation."
Strata has a land bank of 1550 plots and expects to complete 400 homes this year in South and West Yorkshire. The company is also looking to expand into the East Midlands.
Barratt in confident mood
Barratt has announced strong pre-tax profits of £171 million for the six months to the end of December. Turnover increased to £1.18 billion as forward sales increased by 6%.
Chief executive David Pretty said Barratt had a record £1 billion order book and had sold 90% of its homes this year. He also said that the company were on track to meet full year unit sales forecasts of 14,500, up 500 on last year, including about 2,000 social units.
Heron given deadline on Crest bid
The takeover panel have set a May 4 deadline for Heron International to make a bid for Crest Nicholson. This follows a request from Heron for access to Crest’s books, which was denied. Heron believes that the panel’s decision put the onus on Crest to allow access to information to value the company. (FT, Independent, Telegraph)
Wilson Bowden wins right to redevelop Ravenscraig steelworks
Wilson Bowden’s plans to redevelop of the Ravenscraig steelworks in North Lanarkshire, Scotland, have been given the green light following a unanimous ruling by three judges at the Scottish Court of Session, who dismissed the appeal against the proposed billion pound scheme.
“The unanimous decision is great news,” said Wilson Bowden group chief executive Ian Robertson. “We were confident throughout that the appeal by Standard Life and Land Securities would not succeed. Furthermore there has been overwhelming support for this project at local level. This now clears the way for the planning approval process and for the whole regeneration of this area to get underway.“
Wilson Bowden hopes to be on site by the end of the year. Its plans for the site 450 hectare (1,125 acre) site will see the development of up to 3,500 new homes, community facilities including libraries, schools and a church, and a major industrial park, business campus and hotel.
Paul Samter
Senior Analyst – Economic and Policy Affairs
House Builders Federation