A weekly news summary covering all aspects of the housebuilding industry. Available to members only.
Economic News
Falling petrol price drives down inflation….
The target rate of inflation, the Consumer Prices Index (CPI), fell from 2.3% in October to 2.1% in November, the lowest level in five months. This is now almost exactly in the middle of the MPC’s target range of 2.0%, +/- 1.0%. The largest downward effect on the CPI came from transport, with petrol and diesel prices falling for the second consecutive month. The average price of ultra-low sulphur petrol fell by 3.6 pence per litre over the month, compared to a 1.1% rise in November last year.
(www.statistics.gov.uk)
… as earnings growth slows and unemployment rises
The headline rate of earnings growth fell in the three months to October. Average earnings including bonuses rose by 3.6% in the three months to October, when compared to the same three months in 2004, a sharp fall from a rate of growth of 4.1% in the three months to September. When bonuses are excluded, the slowdown is less pronounced, with earnings in the three months to October up 3.9% compared to last year, after growing at 4.0% in the three months to September.
Despite a rise in the number of people employed, the ILO defined rate of unemployment rose to 4.9% in the three months to October, up from 4.7% in the preceding three months and the highest level since 2003. The claimant-count measure of unemployment rose by 10,500 over November, with the rate unchanged from October at 2.9%, although October’s figure was revised up from 2.8%. The claimant count has risen in every month of 2005, with the rate of unemployment having risen from 2.6% in January.
(www.statistics.gov.uk)
… while retail sales pick up modestly
The volume of retail sales rose by a seasonally adjusted 0.7% between October and November, to stand 2.2% higher than a year earlier, the highest rate of annual growth in nine months. Although the monthly sales data are notoriously volatile, sales for the three months to November (the three month figure is often quoted to “iron out” volatility) rose by 1.0% from the previous three months, the fastest rate of growth since the third quarter of 2004.
(www.statistics.gov.uk)
Political Events
Conservatives complete shadow ministerial team
The Conservatives completed the full list of their shadow ministerial team. The new housing spokesman is Michael Gove, one of David Cameron’s closest political allies in the new generation of MPs. The list can be seen at:
www.conservatives.com
Lyons Enquiry consultation paper and interim report
Sir Michael Lyons launched a consultation on the future role of local government, with the aim of developing proposals for a “funding system that is sustainable, fair and effective for the future”. The consultation will ask what the public want local government to do, and how to balance the need for adequate national standards and sufficient local choice over priorities. The consultation will seek views on the strategic role of local government, referred to in the consultation as "place-shaping". One of these stated areas is "where new housing and development should be located". The consultation will conclude on 13 March 2006.
The interim report argues for a well-informed public debate “in every community and invites local authorities to engage worth their local communities to work out how best to address the questions raised”.
(www.lyonsinquiry.org)
Company News
Persimmon makes another acquisition
Persimmon has acquired regional housebuilder Senator Homes for £25 million, just weeks after its acquisition of Westbury for £643 million – which takes effect on January 5. Senator operates in the north of England and north of the border, with businesses in Cumbria, Dumfries and Lockerbie and a landbank of 800 plots. Senator completed 211 homes in 2004.
The company’s offices will be merged with Persimmon's Lancashire and west Scotland businesses.
(www.persimmonhomes.com)
Housing Market
Official figures show fall in house prices…
The Office of the Deputy Prime Minister (ODPM) revealed that house prices fell by an unadjusted 0.3% in October, reversing a 0.3% rise in September, as the annual rate of price growth fell from 3.3% to 2.2%. Regionally, prices were slightly lower than a year ago in London (-0.2%), the South East (-0.4%) and East (-1.0%), while the northern regions continue to see rising prices.
(www.odpm.gov.uk)
… while Rightmove report prices falling over the last month
Asking prices fell by 0.8% from 13 November to 3 December, according to website Rightmove, although prices stood 3.4% higher than a year ago. Rightmove commented: “We expect the property market to be positive and more traditional during 2006 without the peaks and troughs experienced over the last 2 years. This is based upon the market’s sound foundations and a continuation of the recovery observed during the second half of 2005.”
(www.rightmove.co.uk)
Other News
Company "first" for East Lancashire pathfinder
Elevate East Lancashire has become the first housing market renewal pathfinder in the country to form a limited company. The company will take overall strategic responsibility for the pathfinder programme, which focuses on creating sustainable neighbourhoods in five local authority areas in East Lancashire.
Helen France, NWDA Executive Director of Development and Partnerships and Board Member of Elevate said: "Elevate has the potential to deliver far reaching benefits across the whole of East Lancashire and it is vital that there is a strong structure in place to focus on delivery. The Agency fully supports Elevate's goals to revive the area's housing market and create sustainable communities where people want to live and work, and we are involved in a number of projects across East Lancashire in support of housing market renewal. This is an important step forward that will cement all partners' commitment to taking this crucial initiative forward."
(www.englishpartnerships.co.uk)
Date set for introduction of REITs
After confirmation of draft legislation for Real Estate Investment Trusts (REITs) in last week’s Pre-Budget Report, it was announced that the new legislation will be included in next Summer’s finance bill and the new tax treatment will apply from 1 January 2007. The key features will include that REITs will be allowed in savings products such as ISAs, no corporation tax will be paid in return for distributing 95% of net profits to investors, no shareholder will be allowed to hold more than 10% of any REIT and 75% of income must be from property rents. (Financial Times, Times)
Housing Association applications to build up sharply this year
Figures released by NHBC show a 12% rise in the number of applications to build new homes, by the private and public sector combined, in the UK in November this year compared to the same month last year. Private applications were only marginally higher, but applications by UK housing associations were up by 129%.
NHBC Chief Executive Imtiaz Farookhi said: “Our statistics show a substantial increase in UK housing association applications during November. Furthermore, so far this year there have been 28,388 housing association applications, a 42% increase on the same period last year. The increase is primarily due to increased government funding to deliver more affordable housing over the next two years through Housing Associations.”
(www.nhbc.co.uk)
Paul Samter
Senior Analyst - Economic and Policy Affairs
Home Builders Federation
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