HBF Weekly News Summary, 10 March 2006

A weekly news summary covering all aspects of the housebuilding industry. Available to members only.

HBF News and Activity

HBF appear before Science and Technology Committee

HBF gave evidence to the House of Lord’s Science and Technology Sub Committee 1 inquiry on Water Management on 7 March. HBF reinforced its view set out in its response to the proposed Code for Sustainable Homes that the government should take a “big picture” approach on such issues, noting there were many issues involved and that these needed to be coordinated in a cost effective way without asking home builders to deliver changes they could not reasonably influence.

Yvette Cooper to speak at HBF AGM

HBF has announced that bookings are now being taken for the Annual General Meeting and Luncheon on the 25th April 2006. Guest Speaker will be Yvette Cooper MP, the Minister for Housing and Planning. To reserve a place email events@hbf.co.uk or call: 0207 960 1646.

Economic News

MPC leaves interest rates on hold

The Bank of England’s Monetary Policy Committee (MPC) left the repo rate unchanged at 4.50%, where it has remained since a 25 basis point cut last August. The outcome had been widely anticipated by commentators and the financial markets. Opinion is broadly spilt on whether rates will remain unchanged or cut at some point this year. (MPC Decision)

High street retailers continue to struggle

Retail sales rose by 0.6% on a like-for-like basis in February, compared to the same month a year ago, according to the British Retail Consortium (BRC). Total sales were up 3.5% on the same basis. Like-for-like sales in the three months to February were up 0.9% compared to the same period a year earlier, a slight slowing from a 1.1% rise in the three months to January.

BRC Director General Kevin Hawkins commented: “These results underline yet again the continuing squeeze on consumer spending and, contrary to the Bank of England’s expectations, there is no sign of an upturn. Reports of a recovery in the housing market have yet to work through to the big-ticket product categories, which have been depressed for the past 15 months. Meanwhile the industry’s fixed cost base continues to rise well above the general rate of inflation. Shop price inflation, in contrast, remains around zero.” (BRC February Retail Sales Monitor)

Political News

State of English Cities Report

The Office of the Deputy Prime Minister published an independent report by a group of experts led by Professor Michael Parkinson into the State of English Cities. The report highlighted a number of challenges faced by cities, as well as success stories. The report calls for the urban renaissance to be sustained and widened, and for the economic success of cities to be more widely spread, both within the cities themselves and across the country. The report claims that “local leadership is important” and “shows that the policy climate for cities in the past was not sufficiently helpful to city leaders”.

Leeds and Manchester were noted as particular successes, but “many cities in the north and west are not yet catching up with the most successful cities in the south and east” and “more needs to be done for that to happen and for English cities to catch up with the best in Europe”. (State of English Cities Summary)

Heseltine to spearhead Conservatives Cities Task Force

Opposition leader David Cameron announced that former Deputy Prime Minister and Environment Secretary Michael Heseltine will lead the Conservative “Cities Task Force”, which is being set up to focus on new policies to promote regeneration in Britain’s cities. It has been specifically tasked with looking at large-scale urban regeneration. Lord Heseltine commented: “Instead of areas which a large number of people try to get out of because the schools aren't good enough, because the housing isn't good enough, because the dereliction is off putting, you have to make them competitive with those leafy suburbs to which people go." (Conservatives Press Release)

Government announces third Sustainable Communities Summit

The Office of the Deputy Prime Minister announced that John Prescott is to host the third Sustainable Communities Summit in the week starting 5 February 2007 at the G-Mex Centre in Manchester. The event will include a major exhibition, the Sustainable Communities awards, a summit dinner, workshops, site visits and fringe events. (ODPM Announcement)

Conservatives review planning policy

Shadow Secretary for the Office of the Deputy Prime Minister Caroline Spelman unveiled Conservative plans to promote more eco-friendly homes, to revitalise rundown suburban communities, with planning rules that encourage the building of homes with gardens and parking spaces, to encourage more accessible and flexible shared ownership schemes and to help people in social housing to move up the property ladder. The Shadow Minister said: "Conservatives believe in wider home ownership as a matter of social justice. We want to bring down the barriers to getting on the housing ladder, to share prosperity, to give families the scope to grow and to fulfil people's aspirations of having a home of their own." (Conservatives Press Release)

HBF Comment: In a press release in response to the Conservatives’ announcement, HBF Executive Chairman Stewart Baseley said: “The HBF welcomes the Conservative Party's commitment to look at ambitious changes to planning regulations to help the market deliver the homes that people aspire to own. David Cameron's request for the Quality of Life Policy Group to look at density targets and car parking provision is recognition of the problems caused by overly restrictive planning regulations.” (Press Release)

Conservatives to oppose HIPs

The Conservatives also re-iterated that they are to oppose the Government’s proposed Home Information Packs (HIPs). Mrs Spelman said the packs would do nothing to stop gazumping or speed up the process of buying a house: "Instead, sellers will be saddled with an extra cost of up to £1,000, lenders will probably demand their own assessments and many buyers will want their own survey.” (Daily Telegraph)

The Conservatives’ comments coincided with a National Association of Estate Agent (NAEA) survey, which revealed that 60% of those surveyed (a sample of 1300 of the general public who have an interest in the housing market) believe that the 14 day wait for the HIP to be prepared will cause them to miss out on prospective buyers. 73% said they would think twice about marketing their home as a result of the mandatory cost and delay caused by HIPs. (NAEA Research)

Corporate News

Redrow announce interim results

Redrow announced that pre-tax profits were £53.4m in the six months to December, compared to £68.3m in the same period a year earlier, on turnover of £338.8m, in its interim results. The number of completions was virtually unchanged at 2,077 (compared to 2,111 in the six month to 31 December 2004) while the land bank was increased to 18,400 plots.

Chairman Robert Jones was more positive on activity in 2006: “Pricing in 2006 has been more robust though customers still remain cautious. Our sales rate per outlet has increased by over 10% since the start of the new calendar year compared with the same period last year with approximately 6% more outlets in the marketplace.” (Redrow's Interim Results)

Housing Market

House prices rise in February

House prices rose by a seasonally adjusted 1.4% in February, following a 0.2% decline in January, according to the Halifax House Price index. Prices were reported up 5.5% in the three months to February compared to the same three months a year earlier. The Halifax Index has seen a rise of more than 6% since July last year, adding weight to the theory that last August’s cut in interest rates unleashed some “pent up” demand.

Halifax expected prices to grow by 3% this year with sound fundamentals underpinning the market, although the continuing high level of prices in relation to earnings, a weakening of the labour market and rising council tax and utility bills are expected to act as a constraint on demand. (February Halifax House Price Index)

Other News

Code for Sustainable Homes to be strengthened

Along with confirmation that Part L of the Building Regulations will come into effect from 6 April, the Office of the Deputy Prime Minister announced they would be strengthening the Code for Sustainable Homes, which is due out later this year. (ODPM Press Release)

HBF Comment: The key changes are the inclusion of minimum requirements on energy and water efficiency for all levels of the Code and raising the lowest level of the Code above current building regulations. HBF has written to Ministers to express its concern that these changes have been announced only three days after the close of the consultation period without any prior consultation and is seeking an early meeting with Ministers.

Cost of owning a home rises sharply

The cost of owning and running a home increased by 7% in the financial year 2004/5, according to research by Halifax, more than three times the rate of inflation, which was 1.9% over the period. Council tax and utility bills combined accounted for the biggest share of the total cost, followed by mortgage interest costs, which accounted for 34% of total cost. An average UK home owner spent 17.5% of their income on housing expenses. Annual costs were highest in London (£8,133) followed by the East (£7,256) and south East (£7,248), while the least expensive region was the North East (£4,990). Halifax also expect higher fuel and council tax bills to more than offset lower mortgage costs in the current financial year, meaning that costs are set to rise in 2005/6. (Halifax Review of Cost of Owning and Running a Home)

EC Energy Strategy Green Paper

The European Commission published a Green Paper “A European Strategy for Sustainable, Competitive and Secure Energy”, proposing that a Strategic EU Energy Review be presented to the Council and Parliament on a regular basis. The paper raised possible actions such as “long-term targeted energy efficiency campaigns, including efficiency in building, notably public building” and guiding “consumers and manufacturers” with more focus “on rating and showing energy performance of the most important energy-using products”. The paper also called for “research in areas of high energy use – housing, transport, agriculture, agro-industries, and materials”, in which the proposed European Institute of Technology could play an important role. (EC Energy Green Paper)

Consultation/Key Dates

HBF/HBM/NHMB EVENTS

For a full list of HBF events please visit the HB Media website click here

Paul Samter

Senior Analyst - Economic and Policy Affairs

Home Builders Federation

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