A weekly news summary covering all aspects of the housebuilding industry from Pierre Williams, the HBF's head of media. Available to members only.
Commuter-belt and flats feel the squeeze
The values of new homes are rising at less than half the rate of older properties. New homes rose 7.8 percent this year but the price of older homes rose 18.2 percent. The principal reason for this is an over-supply of new flats which rose by less than five percent - a point proved by figures showing that new detached homes rose 10.7 percent - virtually the same as older detached which rose 10.8 percent. Older terraced houses showed the biggest increase on 21 percent - a reflection of their popularity and ample supply in the north where the market was most buoyant.
House prices in the London commuter belt have not risen as quickly as surveys suggest according to Land Registry figures. All 21 counties where prices rose by 10 percent or less during the last year are in the South. Berkshire was worst hit with prices rising by five percent in Windsor and Maidenhead, two percent in Bracknell Forest and prices frozen in Reading. By contrast prices in Middlesbrough and Blaenau Gwent shot up by 59 percent. (All media)
HBF note: Are we overdoing it on flats? HBF has repeatedly demonstrated how flats have come to dominate the new build market, successfully, in a very short space of time. But with market conditions changing, the under-lying and unchanged preference for houses appears to be making itself known.
Bank signals that further quarter point might suffice
The Bank of England has signalled that a further quarter-point rise interest rates to five percent will probably be sufficient to keep inflation under control but that house prices remain the most significant risk in its efforts to achieve stability. Economists said either a house price collapse or continued strength in the market would “throw a spanner into the Bank’s projections”. The only acceptable outcome then, is for the much-hoped for slowing down of the market to materialise. For now, at least, this would seem to be the likeliest outcome. The next few months will be crucial. See following items. (All media)
Confidence falls as housing boom ends
The latest survey from Hometrack showed a slight fall in house prices for July and indicate price rises for the year running at just 3.6 percent. More property is coming onto the market and a four percent fall in new buyers have all contributed to the weakening of the market. Hometrack said: “Seldom in recent years have so many statistics all told the same story: the boom is over.” Meanwhile a Prudential ‘Mood of the Nation’ survey shows a weakening of public confidence. Less than half of homeowners expect prices to stay stable - a drop of 12 percent since April. (Express, Independent)
Countrywide reports 25 percent drop in sales
Even stronger evidence of the slowdown emerged from the estate agency chain Countrywide, which has reported a 25 percent fall in sales last month compared to the same month last year. Countrywide boss Harry Hill, said: “The last interest rate rise might have been one too far.” Peter Bolton-King, chief executive of the NAEA, said: “This is shocking news but market conditions are tough now and will get even tougher. It is a buyer’s market and sellers and agents will have to price realistically if they want to sell.” (All media)
Modern homes unfit for climate change?
Modern, lightly built executive homes - especially timber-framed - will not be suitable to cope with future climate change says an Arup report. The design and engineering consultants say temperatures inside such homes will reach unbearable levels and that further restrictions on the use of air-conditioning can be expected.
Gavin Davies, Arup associate director, said: “The existing building stock has not been developed for future climate change. If you are looking at buildings designed for the long-term, then lightweight construction is going to be very susceptible to climate change. We need Mediterranean shutters, heavy walls, smaller windows and verandas to keep cool.” In an article on the report, Building says this calls into question the government’s commitment to timber-frame, modular and other lightweight construction systems. (Guardian, Building)
Shareholders to vote on Berkeley management plan
Berkeley management has agreed to allow shareholders to vote on whether to go ahead with a controversial slimming down operation. The plan is to return £1.4 billion to shareholders (£12 a share) over six years as the company scales down housebuilding to focus on regeneration. But the scheme is also geared to giving senior management about 15 percent of the new, smaller firm. Investors have mixed feelings with some saying it would be strange to give top managers such a good reward for scaling down the firm but others saying management has proved itself and that it could work well for everyone. The proposal now, is to allow voting on each of the individual components of the restructure scheme. Details are being thrashed out and should be sent to shareholders by the end of the month. (All media)
Prescott’s ‘Concrete Britain’
The Mail launches an attack on John Prescott’s housebuilding plans on the back of an article in the Economist that questions whether the centralisation of the planning process is the right way to go. The Economist says that whilst more housing is needed, taking power away from district and county councils is the wrong approach and says nimbyism would be best overcome by compensating existing residents for neighbouring development. It says: “If the market did not place enough value on the proposed development to make up their loss then it would not - and should not - go ahead.” The Mail takes this up with a more aggressive stance: It comments: “A government that gave us those dodgy dossiers on Iraq is now hell-bent on promoting the equally mendacious claim that Britain is in the grip of a housing crisis. This government doesn’t care a hoot about local communities. Nothing matters but its wild guesstimate of a non-existent shortage.” (Economist, Mail)
HBF note: Measured stuff from the Mail. Could it have been written by former editor and now regular columnist, Sir Max Hastings, current president of the CPRE?
Personal bankruptcies reach record levels
Personal bankruptcies during the second quarter of the year were the highest since records began - the first clear evidence that rising interest rates are clashing with the record level of personal debt. (All media)
Inheritance tax claims two new victims per minute
Two families per minute find themselves liable for Inheritance Tax (IT) as a result of the house price boom. The number of homes valued at more than the £263,000 IT threshold rose by almost half a million in the first half of this year according to a study by Friends Provident. (Telegraph)
Tories would extend right-to-buy
A Conservative government would extent right-to-buy to housing association tenants, party officials have announced. In a housing policy document to be released in the autumn, the Tories will say: “We intend to greatly extend the availability of transferable discounts that enable people to make the transition from social housing to the home of their choice. By helping people move into market housing more easily, countless social houses will be freed for re-letting to families in need.” No mention is made of how this scheme would be funded although they have conceded that it would result in extra costs. (BBC)