A weekly news summary covering all aspects of the housebuilding industry from Pierre Williams, the HBF's head of media. Available to members only.
Housing boost in comprehensive spending review
The chancellor has announced a £1.3bn or 4.1 percent increase in spending on housing over the next three years. Some of this money will have to be found from “efficiency savings” across the social housing sector. Most of the money will be allocated to the Housing Corporation and John Prescott has promised 10,000 extra social rented units by the end of 2008 - an improvement but still far short of Kate Barker’s recommendations. Social housing groups have welcomed the increased funding, but expressed concerns that their belts are already so tight that finding the efficiency savings required of them might not be possible. The HBF welcomed the renewed commitment to delivery but warned that the spending review’s allocation of just an extra £150m for infrastructure improvements was woefully inadequate. Pierre Williams for the HBF, said: “Private housebuilding firms have repeatedly demonstrated they can deliver affordable housing at best value but to do so must be allowed to compete on equal terms with the social sector.” The Conservatives said the plans would “chew up greenfield land”.
HBF note: The gradual morphing of Barker’s recommendations of “more housing” to “more affordable housing” continues. Given that the whole tone of Gordon Brown’s spending review has been one of tightening the public purse strings, delivering housing at best value to the taxpayer must surely appeal to government. Our industry must therefore demonstrate further its ability to deliver better value for money than the social sector.
Rates “almost certain” to rise
Despite the efforts being made to impress the Bank of England how effective recent rate rises have been in cooling the housing market, further rises are a “done deal” according to most City analysts. Although bankers say that another rise soon would be “hard to square with the gradualist approach”, economic growth is currently faster than its long-term sustainable trend rate and most expect rates to climb to between 5.25 percent and 5.5 percent by the middle of 2005. However, an unexpected but moderate rise in unemployment announced on Wednesday might yet stave off a further rise next month as the Bank re-appraises the strength of the economy. (All media)
Landfill directive chaos threatens urban regeneration hopes
The government’s brownfield regeneration strategy has been dealt a serious blow because of its failure to deal with a EU directive. The landfill directive severely curtails disposal of toxic waste. The HBF warned that the nationwide reduction of toxic landfill sites from 200 to about 12 could increase the cost of cleaning up each contaminated plot by about £3,000 - more than offsetting the government’s increased housing spend in the comprehensive spending review. Environment minister Elliot Morley has admitted there will be a shortage of capacity but said he wanted the country to forget it’s “dump and forget” culture and carry out more on-site remediation. However, the HBF pointed out that this was too expensive for smaller sites and that the failure to deal with this long-known directive would cost the sustainable communities plan dearly. Pierre Williams said: “With two-thirds of the 160,000 homes built each year on brownfield the bill could reach £300m a year.” Steve Wielebski of Miller Homes provided examples of how the directive had already forced the abandonment of regeneration schemes, while the Rics said: “This is about as far from joined up government as you can get.” Conservative environment spokesman Anne McIntosh said she was “appalled” at the government’s inaction. (Telegraph)
House prices rise again - official
House prices rose 1.2 percent in May - adding £2,100 to the average home according to the ODPM’s official price index. Price growth was strongest at the lower end of the market with flats rising 3.5 percent while detached houses fell 0.4 percent. Wales saw the highest annual rate of growth at 27.5 percent - well ahead of the 11 percent seen in England. Again, the North far outperformed the South with hotspots leaping as much as 28 percent although London is now recovering with prices 12.2 percent higher than a year ago. (Guardian)
Government targets property-rich middle classes
Well-off middle class households face being stung by increasing property taxes in a future replacement of council tax. Following pensioner protests, ministers have decided to change the system to make it “fairer”. As they have also rejected the idea of introducing a local income tax, they are to opt for a replacement focused on house prices. This is likely to mean more tax bands at the top and lower ends of the housing market. A nationwide re-evaluation of house values is already underway. (Sunday Times, Express)
Britons’ suburban dreams
Britain’s favourite home remains a detached house with generous garden, either in the country or suburbia. This is the not-so-surprising finding of a housing attitudes and aspirations survey by Legal & General. Whilst 21 percent want this type of home in the suburbs and a further 23 percent aspire to the same ideal in a country setting, just 12 percent hanker after a city warehouse apartment. Five per cent want a castle. The suburban option was particularly popular as it offered the space and privacy people want, together with convenience. Despite government hopes, neighbourliness is not a factor with less than one-in-five knowing their neighbours “very well” and 37 percent admitting a limited knowledge of their neighbours. Favourite locations were Kent, Surrey, Essex and Dorset. Least popular were Lancashire, Warwickshire, Nottinghamshire and Norfolk. (Guardian)
Wimpey joins forces with Prince Charles
George Wimpey has taken on the Prince’s Foundation as an urban design consultant. Their first venture is a 500-home development on a 130-acre site at Crewkerne, Somerset. A public inquiry is expected in October and the Foundation is to advise on layout and design. George Wimpey divisional managing director, Mike Turner, said: “We would like to go on to partner them on other projects.” There has been a mixed response to the Prince’s first development, Poundbury, which architect Lord Rogers called a “questionable exercise in Hardyesque nostalgia”, but for which John Prescott remains keen. (Sunday Times)
City of homeless
Britain has a “hidden homeless” population the size of Manchester who squat, share or just sleep on friends’ sofas according to the charity, Crisis. Thousands more in bed and breakfast lodgings find it hard to get jobs, rely on benefits and cost £450 million in lost taxes. The charity thinks this will rise to a million by 2020 and has called for a new census to reveal the true scale of the problem. (Guardian, Express)
Town and country price gap narrows
The difference in house prices between London and the rest of the country has fallen to its lowest level for five years according to the Halifax. The bank sees this as evidence of a weakening of the market. London prices are now 1.56 higher than the national average, having fallen from 1.87 times higher in 2001. The Council of Mortgage Lenders agreed: “There has been a discernible change in market sentiment over the past few weeks. Most market indicators remain strong but many are also consistent with the prevailing market wisdom that the long-term slowdown has begun.” (FT)