A weekly news summary by Pierre Williams, the HBF's head of media, covering all aspects of the housebuilding industry. Available to members only.
Taylor Woodrow Feels the Chill
Taylor Woodrow has felt the chill of the cooling housing market, warning investors that full-year profits are likely to be marginally below earlier expectations. However, CEO Iain Napier said the situation had improved in December and warned that the cooling had affected the whole sector: "These are industry levels, not just us," he said. The increasing wariness of buyers was revealed by a 10% fall in visitors during the second half with reservations 25% to 30% lower. But the biggest hit stemmed from one-in-four buyers pulling out during October and November when negative speculation about the housing market was at its height. On Monday, the group said full-year profits would be around 387.5m compared to forecasts of 402.2m. However, completions were still up 18% on 2003 at 9,053 (although down on the 10,000 forecast at the start of the year), and average selling prices rose 9% to 197,000. The group's US housing operation continues to boom and analysts were only "slightly disappointed". Shares closed up 0.75p to 262p. (FT, Express, Telegraph)
Bovis Remains on Course For Record Results
The slowing market has not affected Bovis, which is on course to make record pre-tax profits in line with market expectations. Indeed, CEO Malcolm Harris said his company had seen an unexpected uplift in activity at the end of the year. In October, the company forecast annual sales just 6% higher than 2003 but actual sales were 9% higher. "We have seen good sales through November. We launched a number of new developments and the products have sold well," said Harris. As a result, analysts are predicting pre-tax profits of 145m for 2004, up from 123m in 2003. Shares closed up 13.5p to 584.5p. Bovis is sticking to its plan to tackle any market slowdown by increasing production of lower-priced homes. Last year it produced 1,550 units under 200,000. This year it intends to build 2,000 of these - two-thirds of its total production. With a very healthy land bank and a determination for solid, organic growth, analysts cite Bovis as one of the tips of the sector. (FT, Times, Telegraph, Express, Mail)
Buyer Confidence Ebbs Further
Homeowner confidence has fallen to its lowest level for seven years but is starting to stabilise, according to the Woolwich. According to the bank's "Consumer Confidence Index", 39% of owners expected prices to rise in December, down from 40% the previous month. The 1% fall is a sign that confidence is stabilising, even if it is still at a low ebb. Woolwich chiefs seemed cheered by the news and suggested a pick up in confidence and activity in Spring is now a likely prospect. (Guardian)
HBF Note: This ties in with comments from both Taywood and Bovis of a better than expected December
Prescott Challenged on High-Density "Communities".....
Although more people than expected would be happy to live at high-density provided the design and quality of homes was high, John Prescott's "sustainable communities plan" is seriously flawed. That's the finding of a study by the London School of Economics which said the drive for high-density would not create long-term communities but simply provide homes suited to a particular life stage. Although urban living would remain popular for career minded singles and couples in their 20s and early 30s, the London-wide survey found those wanting children would continue to migrate to the suburbs in search of the family houses and environment that families have always sought. (FT)
..... as Housebuilders Home in on Public Demand
It's no accident that housebuilders want to build family houses. They know what people want and no amount of government exhortation is ever going to change that. "Decades of experience has taught us that we must provide the homes that people want - not what the government or planning system thinks they ought to have," said Pierre Williams for the HBF. "There's a widespread belief that housebuilders are not keen on high-density, that they are profligate with land and build only detached executive houses. But the opposite is true. As land is invariably the most expensive component of any new development, being wasteful with it makes no commercial sense." Whilst the industry supports the density drive, true sustainability can only be achieved by recognising its limits. "The root cause of the problem is a lack of family housing. That has made prices rocket to the point where those aspiring to start a family must surely be wondering whether they can ever afford to do so." (FT)
HBF Note: That a survey of Londoners finds favour in high-density living is surely no surprise. But nationwide, pressure is increasing for a more balanced housing mix. High density is good. But from a housing point of view, you can have too much of a good thing.
Planning Isn't Working
Government's promises of a "faster, fairer planning system" are failing. Its series of reforms have simply worsened the bottlenecks and the latest figures show how bad the situation has become. In what now seems wildly optimistic, government has a target for 100% of local authorities to process 60% of major planning applications within six weeks. This target is meant to be reached by March 2007 but at the moment just 42% of councils are making the grade. HBF, Barratt and Redrow all warned that failure to tackle this would result in failure of the government's housebuilding plans. "Twenty years ago it took eight to10 weeks to get a detailed planning approval. Today it is eight to18 months for the same application," said Barratt's David Pretty. Redrow's Paul Pedley said: "The ODPM has got to make sure that all the rhetoric is translated into action. Let it not just stop at loads of words, we need action." Pierre Williams for HBF said government must follow up its promises of sanctions on councils who rejected planning applications without proper consideration, thereby clogging the appeals system. Planning Minister Keith Hill accepted some councils had been "adopting unacceptable behaviour to meet targets". (Sun Telegraph)
Bank Holds Rates at 4.75%
As expected, the Bank of England yesterday decided to hold interest rates at 4.75%. There had been some speculation that with High Street spending over Christmas at its lowest for a decade, together with gloomy news from manufacturing industry, the Bank might be tempted to start trimming rates. But it had to balance this against personal debt, which is continuing to rise rapidly. Now the pressure is on for the Bank to cut rates immediately if economic data worsens further or the housing market slowdown shows the first hint of turning into a slump. (BBC)
Focus on Flood Defences Government Warned
The government has been warned to increase flood defence investment in the wake of serious flooding earlier this week in the North and Scotland. Environmental groups said urgent action must be taken now if future disasters were to be avoided. Lib Dem Environment spokesman Norman Baker said: "The government is moving far too slowly." The Environment Agency unveiled the possibility of a building a 10-mile barrier across the Thames estuary but there is no sign of this being approved within the foreseeable future. In response to the government's housebuilding programme, Pierre Williams for the HBF, said: "We need clarity from government about what it is going to do." (Express, all media)