A weekly news summary covering all aspects of the housebuilding industry. Available to members only.
Economic News
Earnings growth up, but so is unemployment
Labour market statistics for February further highlighted the Bank of England’s interest rate dilemma, with earnings growth accelerating while unemployment increased.
Including bonuses, seasonally adjusted average earnings rose by 4.7% for the three months to February compared to the same period a year earlier, up from a 4.4% rise in the three months to January, with the city bonuses likely to have been a key factor. Once bonuses are excluded, earnings growth fell marginally from 4.4% to 4.3%.
The ILO measure of unemployment rose to 4.8% over the three months to February, 0.1% higher than in the previous three months. The claimant count measure of unemployment saw an increase of 11,000 in March, although the rate stood unchanged at 2.7%. (http://www.statistics.gov.uk/pdfdir/lmsuk0405.pdf)
Election Round Up
The three main parties launched their manifestos this week. While there was varying detail on the depth of housing policy in each document, HBF outlines the main policies of each party.
Labour
There was little mention of specific housing policy in Labour’s manifesto. The only exception was a pledge that, from April 2006, all new homes receiving government funding will meet the new Code for Sustainable Buildings and local authorities will be encouraged to apply similar standards to private homes.
At the manifesto launch Deputy Prime Minister John Prescott pledged “that every hardworking family would benefit from Britain's improving economy by extending their homeownership and key worker schemes and providing 400,000 new affordable houses.” We believe this is essentially a restating of existing housing policy as summarised in the 5 year “Homes for All” strategy published in January.
More generally, the government’s housing policy has been outlined through ODPM announcements and the budget. This includes extending the Homebuy scheme (where homebuyers purchase a share of the equity of their home), raising the threshold on stamp duty to £120,000, a target of 60% of new development on brownfield land (which has of course been exceeded since 2000) and promoting the “Design for Manufacture” competition which aims to get house builders to build homes for £60,000, releasing former publicly owned land for development. Labour aims raise the number of home-owners by 1 million by 2010. (http://www.odpm.gov.uk)
Conservative
The Conservative manifesto gave a brief outline of their housing policies, although, as we have previously reported, a more in depth explanation of the Conservative position can be found in their “Action on Housing” document, published in March. (http://www.conservatives.com)
The manifesto itself sets out several key policies on housing. These include, “powers currently exercised at a regional level covering planning, housing, transport and the fire service will all be returned to local authorities”, linked to a general pledge that “local communities will have a greater say over planning decisions.” The Right to Buy scheme for council tenants will be extended to housing associations, as part of a plan to boost shared ownership schemes. There is also a pledge to promote development on brownfield land and establish more Green Belts with tighter development rules.
Shadow Minister for Housing and Planning, John Hayes, additionally promised that the Conservatives would scrap proposals for compulsory Home Information Packs (HIPs) at a speech to the National Association of Estate Agents (NAEA). (http://www.naea.co.uk)
Liberal Democrats
The Liberal Democrats also gave a brief outline of their housing policy in their manifesto, which is set out in more depth in their policy paper “Affordable Homes in Safer, Greener Communities” published in November 2004.
The manifesto pledges to tackle affordability by making public sector land available to build 100,000 homes for rent and affordable purchase through shared ownership schemes for local people. They will “reform VAT to encourage developers to repair and reuse empty buildings and brownfield land.” They would raise the stamp duty threshold by £30,000 to £150,000 and in areas where second homes are “overwhelming the local housing market” they will “require people to get planning permission before turning another full-time home into a holiday home.”
The Liberals also pledge to reform the planning system to “make sure local authority plans are sustainable” incorporating targets for Carbon Dioxide emission reductions and account for “the climate change consequences of policies” as well as using “building regulations to improve the environmental quality of new buildings.”
Company News
Morris, Bennett and Woodford Group ranked as three of UK's fastest growing companies
Morris Homes and Bennett Homes have been ranked as two of the UK's top 100 companies for profits-growth in this year's Sunday Times PricewaterhouseCoopers Profit Track 100 list, published this week.
Merseyside-based Morris, one of the largest housebuilders to feature, increased its profits by an average of 51% each year since 2001, reaching £26.7 million in 2004 on annual sales approaching £150 million.
Bennett Homes operations director, Edward Parker, said: "The significant rise in property prices over the past few years helped us to post a 76% annual rise in profits from £966,000 in 2000 to £5.3 million in 2003. However this was an exceptional peak time for the market and is unlikely to be repeated in the near future. We are now in a much more traditional, steadier period."
Brownfield land acquisition and remediation company The Woodford Group has also made the list, reaching 13th position with 86.75% profit growth. (Company press releases)
Persimmon and Fusion enter Design for Manufacture competition
Since the government announced the official start of its so-called £60,000 house challenge, Persimmon has entered the fray in partnership with Fusion Building Systems (UK) and PRP architects.
The team is working on building a prototype low-cost steel frame dwelling as part of Persimmon's MMC project at Irlam, Greater Manchester, where four new homes are being built using different modern methods aimed at focusing on speed of build and reducing on-site waste. (http://www.persimmonhomes.co.uk)
Demand for new homes strong as ever - Westleigh chief exec
Westleigh Developments' chief executive Chris Beighton has spoken out about statistics showing a fall in planning applications for housing, arguing that demand is a strong as ever.
Responding to latest NHBC statistics, showing applications to build new homes were down by 6% in February compared to the same month last year, Beighton said: "I can't believe builders are being deterred because of a fall in demand. The demand is still there.”
Beighton said the fall in planning applications was more likely to be down to a shortage of available land and changes in planning legislation. (Company press release)
Research/Statisitics
ODPM monthly index shows slight increase in house price inflation
Latest house price statistics from the ODPM shows the mix-adjusted average house price in the UK in February 2005 standing at £179,491, down from £180,465 in January 2005 (not seasonally adjusted).
But UK annual house price inflation in February 2005 was 10.5%, up from 10.0% in January 2005. In London, annual house price inflation was 7.1% in February 2005, up from 5.0% in January 2005. (http://www.odpm.gov.uk/pns//pnattach/20050094/1.pdf)
Savills Research on sustainable communities
Head of Savills Research, Yolande Barnes, has modelled the government’s sustainable communities plan and found that the value of homes in such communities could be 44% higher than “would be expected from developing standard product at average densities”. Savills also comment that “The truth is that there is much more of a complex, fine-grain mix of uses in a real place than is found in artificial mixed use schemes. Places that we all know and love, and which we will pay more to live in, contain a much more varied range of housing types than we are building.” (Estates gazette)
London Property market holding up
Cluttons reported that the property market in Central London has held up reasonably well in the first quarter of 2005. Sales prices were reported as unchanged in all but two Central London sub markets over the first quarter, with demand on a par with the previous quarter, although 30% down on a year ago. The lettings market picked up over the quarter, with rental growth of 2.3% and demand up 10% from the fourth quarter of 2004. (http://www.cluttons.co.uk)
HBF estimates for housing building in 2004
HBF has produced estimates for housing starts and completions for 2004, based on full year ODPM figures for England and Wales and data for the first three quarters for Scotland. Private housing completions rose by 4.4% in Great Britain in 2004, to reach 165,000, while private starts rose by 8.2% to 192,000. (HBF)
Other News
FMB calls for a sensible political debate on non-EU workers
The Federation of Master Builders has called on all political parties to hold a sensible debate on this important issue for the construction industry, as the election campaign heats up.
FMB director of external affairs, Andrew Large, said: "The construction industry needs some 380,000 skilled workers over the next five years. Currently these cannot all be provided within the UK. Immigration is therefore necessary for UK construction if skills shortages and project delays are to be avoided. (http://www.fmb.org.uk)
Brownfield is not always best, warns environmental consultancy
A 'blinkered' approach to brownfield development is resulting in the loss of ecologically valuable sites warns ADAS, the UK's largest rural and environmental consultancy.
William Little, an ADAS environmental planning expert said: "The government has set targets that more than half of all new homes should be built on brownfield sites and the argument in favour of protecting the greenbelt is vociferous. But this approach to brownfield construction is too inflexible. In some cases, brownfield sites are of greater ecological value than some greenfield sites and should be left free of construction.
ADAS is calling on planning authorities not to simply authorise brownfield construction as a matter of course. (http://www.adas.co.uk/home)
New homes supply is falling further, warns TCPA
New housing proposals could deliver fewer homes than ever before, director of the Town and Country Planning Association, Gideon Amos, has warned.
Chairing a national housing conference in London, Amos said: "Instead of addressing the crisis of housing shortages, so well documented in the Barker Review, politicians are in danger of going into reverse - giving rise to the risk that in the south east at least we shall soon be building fewer homes than at any time since records began." (http://tcpa.org.uk)
HBF Note: HBF is this week writing to the South East Regional Assembly to express its serious concerns about the housing figures and general approach in the consultation draft of the South East Plan Core Document.
Thames Gateway Bridge moves a step closer
The government has decided not to postpone an inquiry into the proposed Thames Gateway Bridge, a key part of the Thames Gateway regeneration plans. Objectors to the contentious six-lane bridge had hoped they would be given more time to put a case together. Planning inspector Robert Barker said objectors had had since January, when the inquiry was called, to prepare.
The bridge will link the boroughs of Newham and Greenwich. Opposition groups say it will increase traffic levels and cause air pollution. It has since come to light that Barker used to work for Halcrow, an engineering consultancy working for Transport for London on the bridge, and so will be replaced as the lead inspector. (Guardian)
New tax on houses set to fund expansion
A “roof tax” is set to fund an expansion of Milton Keynes and other areas marked for growth in the south. The scheme will require developers to pay the planning authority a tariff of about £20,000 for each house to get permission for new developments. The levy, between 5% and 10% on the cost of an average house, will be used to build schools, health centres, roads and other community facilities.
English Partnerships (EP) wants to increase house building in Milton Keynes from 1,400 to over 3,000 a year. The tax could net the town more than £60 million a year. EP has suggested a level of £18,000 to £20,000 a house with developers paying some in advance and the rest on completion. The chief executive of Milton Keynes council, John Best, said: “Realistically a developer does not want to build, say, 400 odd houses and find there is no primary school. This will give them greater certainty.” (Guardian)
Paul Samter
Senior Analyst - Economic and Policy Affairs
House Builders Federation