A weekly news summary covering all aspects of the housebuilding industry from Pierre Williams, HBF's head of media, available to members only.
The Boom Goes On
Official land registry figures now put the cost of the average home at 163,584 - a rise of 12.6% in England and Wales between the final quarter of 2002 and the same period of 2003. But the overall increase marked massive regional variation with Wales leading the way on a rise of 24.6%, closely followed by the North and Yorkshire and Humberside on 24.6%. The North West was up 20.4%. By contrast, London rose just 7.8% and the South East by 9.2%. Most commentators expect this trend to continue but at a more moderate level as interest rates rise, and with the North faring best over 2004. (All media)
Rates Rise to 4%
As expected the Bank of England cited rising house prices and high levels of consumer debt for its decision to raise interest rates from 3.75% to 4%. With UK economic output higher than expected and the world economic recovery seemingly well on track, most economists predict UK rates of 4.5% by the end of the year. (All media)
First Time Homes Pass 100,000 Mark
The average price paid by first time buyers has passed the 100,000 barrier according to the Halifax. The news has re-ignited concerns for housing key workers and the continuing slump in the number of first time buyers, which at only 355,000 in 2003, is a down a third from the previous year. Mark Hemingway for the Halifax, said: We dont want to see a crash. It is a different marketplace, the economy is not out of control and interest rates are not going to rocket. Pierre Williams for HBF, said: The growing gap between supply and demand is at the root of this, and there seems little prospect of this being addressed in the foreseeable future. (All media)
HBF Note: The debate about the sustainability of the boom, and the seeming lack of options in bringing it comfortably down to the much hoped for soft landing, is raising some concerns about what can be done. Left unchecked for 20 years, the worst-case scenario of generational warfare appears, with an older population of well-heeled homeowners expecting to be looked after by an ever-dwindling workforce of homeless taxpayers. The alternative blunt instrument of taxing housing - an asset that many people have come to regard as their pension - looks like political suicide.
Livingstone Takes Hard Line on Homes Target
Ken Livingstone is threatening to take London councils to court if they fail to meet stiff affordable homes targets set out in his London Plan. He wants 30,000 new homes a year of which 50% should be affordable. But he has conceded that each development must be considered separately in terms of viability for the affordability quota. Pierre Williams for HBF said that rigid affordable targets would simply render many suitable sites unviable with the real risk of worsening, rather than increasing supply. (FT, BBC London)
Housebuilders Anger at EP MoD Land Buy
Wilson Bowden has scheduled high-level meetings with English Partnerships to demand an answer why the regeneration agency stepped in and bought a prime MoD site in Berkshire without going through the tender process. Ian Robertson, Wilson Bowden Chief Executive, said: We believed English Partnerships would only step in to buy land in cases of market failure, not when the market was already operating perfectly well. In future, we will want confirmation that EP is not going to do this again when we bid on sites. Another housebuilder said EPs move might put off companies bidding for public land in future. EP has also refused to say how much it paid for the former RAF staff college site. (Times)
Ministers Promise Reasonable S106/Tariff Demands
The government has toned down its planning tariff proposals to stop councils demanding too much from developers, following a barrage of complaints from industry bodies. John Prescotts department said that under the new tariff, development proposals should not be rendered unviable by the introduction of extraneous requirements, while Planning Minister Keith Hill, said: The planning contribution should be related to the impact of the development and be relevant, proportionate and reasonable. (Trade press)
Record Sales at Bellway
Surging demand has helped Bellway achieved record forward sales in the first half. The companys order book is now 17.5% higher than last year and has already reached 86% of its sales target for the year, with 100% expected by March. Finance Director Alastair Leitch, said: We are very pleased with the way things have gone. We have converted a record forward order book into a record trading position for the first half. (FT, Express, Telegraph)
HBF Note: The FT also rightly comments that Bellway has responded to increased political involvement in housing by working more closely with housing associations and regeneration bodies.
500,000 New Homes for Stansted Corridor
Plans for 500,000 new homes between the Wash and the Thames by 2021, have been approved by the Eastern Regional Assembly, despite opposition from Essex and Hertfordshire councils. The decision was made under pressure from Lord Rooker who reiterated the area had been, and would remain, a designated growth corridor. There will be a period of public consultation over the decision prior to a public inquiry in the summer of 2005. Government is expected to approve the plan during 2006. (Guardian)
Taylor Woodrow Buys Huge Colchester MoD Site
Taylor Woodrow has bought a 209-acre site at Colchester garrison big enough to provide for a fifth of the companys annual housing output. Building is expected to start in summer. Ian Napier, Chief Executive, said: This provides us with a significant amount of brownfield land in an excellent location. The company will remain the sites master developer and provide all infrastructure but may sell on parcels of land later. (FT)
More Movement on Crest
Speculation about a possible bid for Crest Nicholson has increased following the appearance of property speculator Jack Petchey on the firms share register. Petchey has acquired 150,000 shares to take his holding to just over 3%. This has rekindled speculation that the firm could soon receive a bid. Analysts believe Crests expertise in mixed-use schemes is attractive to many potential bidders, including Heron, which has also increased its stake to 12.5%. (Guardian, EG)
Chancellors Reits Move a Step Closer
Gordon Brown is expected to use next months Budget to renew his push for tax-efficient investment in property by way of US-style real estate investment trusts (Reits). If the UK approves introduction of Reits, some analysts expect an improvement of UK property stocks over the next 12-18 months. (Telegraph)
Country & Met Builds on Affordable Housing
Country & Metropolitan has done well by repositioning itself at the affordable end of the housing market. Its share price has climbed from 60p to 200p in four years and the northern and brownfield focused company is eyeing up opportunities in the South. It says it has spotted land-buying opportunities in the outskirts of London. (Independent)