A weekly news summary covering all aspects of the housebuilding industry. Available to members only.
Economic News
Unemployment rises
The ILO measure of unemployment registered 5.0% in the three months to January, slightly lower than 5.1% in the three months to December, but up from 4.9% in the three months to October. There was a very small fall in the total number of people in employment over the period and a rather larger rise in the number unemployed. The claimant-count measure of unemployment rose by 14,600 in February the largest single month increase in over thirteen years, although the rate remained unchanged at 2.9%. January’s claimant-count figure was revised up slightly, almost unchanged from December, which followed a year of month on month increases.
Average earnings including bonuses rose by 3.5% in the three months to January, compared to the same three months a year ago, an unchanged rate from earnings in the three months to December. Average earnings excluding bonuses in the three months to January were 3.8% higher than the same period a year earlier, edging up from 3.7% in the three months to December. (Labour Market Statistics)
Retail sales growth stable
The volume of retail sales grew by a seasonally adjusted 0.5% between January and February to stand 2.1% higher than in February 2005. For the three months to February, the volume of sales was up 2.8% compared to the same period a year earlier, a growth rate that has remained stable in recent months after recovering from below 1% growth in September and October last year. The value of retail sales in the three months to February was 2.1% higher than the same period a year earlier. (Retail Sales Release)
Political News
The number of households set to rise by 209,000 per year
The number of households in England is forecast to increase by almost a quarter over the next twenty years, according the latest household projections from the Office of the Deputy Prime Minister (ODPM).
The latest set of projections are based on the 2003 population estimates and show a considerable rise in the growth in the number of households compared to previous projections. The 2003-based figures project average annual growth of 209,000 households per annum in England from 2003 to 2026, considerably higher than the 189,000 per annum from 2001 to 2021 in the interim 2002-based figures and 150,000 per annum from 1996 to 2016 in the 1996-based projections. This equates to growth of 1% per annum.
The total number of households in England is projected to rise from 20,904,000 in 2003 to 25,713,000, an increase of 23%. This compares with a build rate of 160,000 homes in 2005, itself the highest total since 1990. (Household Projections Press Release)
Timeline for HIP introduction…
The timeline for the Government’s proposed Home Information Packs (HIPs) introduction has been published. The key points in the timeline are: Government gives go ahead for multiple certification schemes in March 2006. The government launches an HIP publicity drive in April 2006. Draft regulations are written, setting out the detailed contents of HIPs in June 2006. A three phase approach to testing the product, which builds up to Government and industry testing across all parts of the process, will run from June 2006 to June 2007. The first certification scheme to oversee the work of Home Inspectors will be approved by the Government in September 2006. Phase 2 of the testing will take place from November 2006 to June 2007, which will enable lenders to use information from Home Condition Reports for valuation. A public awareness campaign will be launched in April 2007. In March 2007, there will then be a review of the outcomes of the final phase of the product launch, with final adjustments ready for “going live” on 1 June 2007. (Timeline in Full)
… with estate agents concerned by the proposed changes
The National Association of Estate Agents published the following response to the HIP timeline: “The introduction of the HIP is the biggest change in the property buying and selling process seen to date. The NAEA remains concerned that there are many unanswered questions. It is therefore critical that a robust and conclusive dry run is held that fully tests any risks which must be eliminated prior to unleashing this legislation on the public. With these concerns in mind, the timeline released by the minister today is extremely challenging and probably optimistic.” (NAEA Response)
Corporate News
Bovis announce results for 2005
Bovis Homes reported that pre-tax profits fell by 19.8% to £116.1m in 2005 compared to the previous year, on turnover of £521.2m. The number of homes sold was all but identical to the previous year at 2,702 (2,700 in 2004). The company switched its product mix in 2005, with apartments accounting for a considerably higher share of sales than in 2004, while Bovis also built more homes for social housing. The landbank was increased by 1,610 plots to 13,138.
Chairman Tim Melville gave an upbeat assessment of market conditions looking ahead: “It is generally accepted that the development of new housing is not keeping pace with the generation of new households and that the housing shortage is worsening. On this basis, the marketplace in which the Group operates should be capable of supporting increased numbers of property transactions, as well as sustaining house prices.” (Bovis Homes Preliminary Financial Results 2005)
Housing Market
House prices rise according to the ODPM…
The Office of the Deputy Prime Minister (ODPM) reported that house prices rose by an unadjusted 1.3% in January, as the annual rate of house price inflation reached 4.3%, up from 2.9% in December. Prices were up in all regions over the twelve months to January, after the East, London, South East and South West had all seen slight falls on an annual comparison over the last few months. Prices in London were up 5.3% compared to January 2005, a figure that has risen quite sharply over the last four months. (January House Price Index)
… RICS also report higher prices as buyer interest continues to rise
The Royal Institution of Chartered Surveyors (RICS) revealed that estate agents reported an increase in the rate at which house prices are rising. A balance of +17% of those surveyed reported that prices had risen in the three months to February, the strongest pace of growth since June 2004. The balance of estate agents reporting rising prices has risen steadily in recent surveys, since turning positive in November for the first time in fifteen months. RICS reported strong increases in London, where a balance of +67% said prices were rising and “other southern English regions have also noted a much firmer tone in recent months”.
While the pace at which new buyer enquiries are rising declined slightly in February, with a balance of +10% of estate agents reporting a rise after +14% in January, this was the ninth successive month to see an increase, a record for the RICS survey (Chart 18).
New instructions to sell also rose marginally in February, with +8% of those surveyed reporting an increase, after three successive months of slight rises. However, the “increases in instructions are lagging the rise in agreed sales and therefore putting some downward pressure on the available stock of property on the market.” The average level of stock per agent fell to its lowest level since October 2004. (RICS Website)
Other News
Revised Part L regulations published
The revised Part L building regulations, aimed at increasing energy efficiency standards for new buildings and coming into effect from 6 April, have been published by the Office of the Deputy Prime Minister. (Link to ODPM Press Release and New Regulations)
New Chief Executive at English Partnerships
English Partnerships (EP) announced that John Callcutt will take up a three year appointment as Chief Executive from 2 May. Mr Callcutt is currently Deputy Chairman of Crest Nicholson, and was formerly Chief Executive at the home builder.
Mr Callcutt commented: “I have a real passion and commitment to urban regeneration and sustainability. The challenge of leading the delivery of some of the UK’s most complex regeneration projects was simply irresistible, and I look forward to keeping our focus very sharp in the next three years.” (EP Press Release)
Consultation/Key Publication Dates
Chancellor to deliver Budget speech 22 March
Code for Sustainable Homes Consultation 5 December - 6 March
Implementation To be advised
Home Information Packs (HIPs) Consultation Closed 31 December
HIPs Dry Run Timeline published 16 Mar
HIPs Introduction 1 June 2007
Barker Review of Land Use Planning 25 January - 28 March
Energy Review Consultation 25 January - 14 April
Lyons Enquiry into Local Government Consultation Closes 13 March
Part L Implementation date 6 April
HBF/HBM/NHMB Events
New Homes Week 20 - 26 March
For all full list of HBF events please visit the HB Media website click here
Paul Samter
Senior Analyst - Economic and Policy Affairs
Home Builders Federation
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