A weekly news summary covering all aspects of the housebuilding industry. Available to members only.
Economic News
Bank of England forecasts a fall in inflation
The Monetary Policy Committee of the Bank of England offered a fairly upbeat assessment of the prospects for the economy in the November Inflation Report, with economic growth expected to pick up back to trend levels, and inflation to decline below target, in the next year.
While GDP growth is expected to remain below trend in the near term, it is forecast to pick up over the next two years due to “a gentle acceleration in household consumption, strong government spending, a stockbuilding revival and a modest improvement in net trade”. The forecast horizon is up to the end of 2008, and the MPC expects growth to slow a little towards the end of the period to around trend (about 2.5%).
CPI inflation is forecast to drop below the 2% target within a year, “as the impact of the steep increases in the oil price drop out of the twelve-month CPI inflation rate”. The recent easing in pressure on supply from demand is also expected to push inflation down. Further ahead, inflation is expected to rise to around the target level as spare capacity is used as output regains momentum. The forecast for inflation is a little lower than in the August Report.
(www.bankofengland.co.uk)
… as inflation falls in October
The target measure of inflation, the Consumer Prices Index (CPI), fell back to 2.3% in October, down from 2.5% in September and reversing a continual rise since September 2004. The largest downward effect came from financial services, while a fall in the price of petrol over the month was also depressed the inflation rate. The Retail Prices Index (RPI) fell from 2.7% to 2.5% and the former target measure, RPIX (which excludes mortgage interest payments from the RPI) edged down from 2.5% to 2.4%.
(www.statistics.gov.uk)
…while the labour market weakens slightly
Average earnings growth slowed marginally in the three months to September, with earnings including bonuses 4.1% higher than the same period a year earlier, down from 4.2% in the three months to August. Once bonuses are excluded, earnings growth was unchanged at 4.0%.
The ILO defined measure of unemployment was virtually unchanged over the third quarter compared to the second quarter, with the rate remaining at 4.7%.
The claimant-count measure of unemployment rose by 12,100 in October, although the unemployment rate was unchanged at 2.8%. The claimant-count has risen in every month of 2005.
(www.statistics.gov.uk)
… and retail sales volumes edge up in October
The volume of retail sales edged up by a seasonally adjusted 0.2% between September and October, to stand 1.5% higher than in October 2004. However, the value of retail sales measured in current prices was only 0.2% higher than a year earlier.
(www.statistics.gov.uk)
Political Events
Pre-Budget Report date set
HM Treasury announced that the Chancellor Gordon Brown will deliver his Pre-Budget Report Speech to the House of Commons on 5 December 2005 at 3:30pm. The Pre-Budget Report provides a progress report on what has been achieved so far, gives an update of the state of the economy and public finances, and sets out the direction of Government policy in the run up to the spring Budget.
(www.hm-treasury.gov.uk)
HBF comment: We also expect that this will be when the government will publish a full response to the Barker Review, the proposal from a new PPS3 for consultation and possible options for a planning gain supplement.
HBF News
HBF chief executive Rob Ashmead steps down
Rob Ashmead has stepped down as HBF chief executive. He had spent four years in the role, during which time he was involved in initiatives aimed at improving relations between the government and industry, and the implementation of a major strategic review of the federation during 2005.Mr Ashmead said: "I have greatly enjoyed my time with the HBF, which has been both challenging and satisfying, but I now want to move on to other things. I shall take some time to consider my options for the future.”
Stewart Baseley, chairman of the HBF, said: "Rob has achieved what we asked of him: the HBF has a strong team of enthusiastic and able people delivering quality services to our growing membership, and is welcomed by Government as valued contributor to the housing supply debate. We wish him well for the future."
(www.hbf.co.uk)
Company News
Taylor Woodrow named as developer for first hospital site
English Partnership (EP) named Taylor Woodrow as the preferred developer for part of the former Park Prewett hospital site in Basingstoke, the first site to be sold of 96 surplus NHS sites held by EP. More than 1000 new homes will be provided on the site as the first step in a programme to deliver up to 14,000 new homes across the country, up to 50% of which will be affordable. The site area is almost 34 hectares and Taylor Woodrow will build 884 new homes on it under the Bryant Homes brand. A further 4 hectares alongside the site have been earmarked for at least 130 homes under the Design for Manufacture scheme.
(www.englishpartnerships.co.uk)
Barratt expect the market to remain challenging but the fundamentals remain sound
In a statement at the AGM Barratt Chairman Charles Toner reported: “We have made further sales progress in this new financial year and forward sales now stand at £900m which, together with completions to date, secures over 60% of our full year requirement.”
Commenting on the market, Mr Toner said: “We are operating on the assumption that the market will remain challenging but are targeting to maintain volumes and are currently achieving sales levels sufficient for us to secure our objectives. However, should the market improve, we have the land, planning and capacity to respond and increase volume. The underlying fundamentals of the housing market remain sound, further supported by the serious delays within the planning system.”
(miranda.hemscott.com)
Housing Market
Rate at which prices are falling slows sharply
The Royal Institution of Chartered Surveyors (RICS) reported a sharp improvement in the balance of surveyors reporting falling prices in its October Housing Market Survey. A net balance of -9% of those surveyed reported a drop in prices for the three months to October, an improvement from -21% in the previous survey and a low of -46% in May. This is the strongest reading for 15 months.
The survey also showed that buyer interest rose for the fourth consecutive month, with new instructions to sell almost unchanged. RCIS commented: “The market is still tilted in favour of would-be buyers, though is beginning to shift to a more balanced position.”
(www.rics.org.uk)
Other News
New-homes.co.uk helps buyers find their dream home
Research for the new-homes.co.uk website found that 16% of registered users said new-homes helped them find the developer or the property they purchased from. A detailed survey was sent out to 15,000 registered consumers and a separate survey was sent to housebuilder advertisers. The response from builders was also positive with 69% of house builder advertisers very satisfied with the website and 15% being extremely satisfied.
(www.new-homes.co.uk)
CABE critical of new housing in the north
A report by the Commission for Architecture and the Built Environment (CABE) was critical of new build schemes in the North. The research reported that of 93 schemes by the 10 largest volume housebuilders in the North East, North West, Yorkshire and Humber: 24 per cent of the schemes were judged 'poor', 70 per cent 'average' and 6 per cent 'good' or 'very good'.
Richard Simmons, CABE chief executive said: "These latest findings show that the design quality of new housing is a national problem. We are planning to build the largest number of new homes for decades and yet almost a quarter of them built in the last three years are judged to be ‘poor’ and the vast majority are simply 'average'. It does not seem to be a question of ability. Every major volume housebuilder has won design-related awards in the last few years - so there's proof that they can all do it. What we need is real commitment and ambition on the part of developers and local authorities alike to deliver great places for people to live."
(www.cabe.org.uk)
In response, HBF Director of External Affairs John Slaughter said: “"CABE's report makes it clear that delivering good urban design is complex. Developers need the right climate within which to work and their good practice has to mesh with that of local authorities and public agencies if we are to continue to make improvements. We look forward to working with others to create a supportive business climate for good design. HBF will also continue to promote "Building for Life" as a sensible and flexible framework of principles to guide the development of best practice across the wide range of housing market requirements that exist."
(www.hbf.co.uk)
Demand for council housing not being met
The numbers of families in England waiting for a council house in which to live has soared by more than 50% during labour’s time in power and now stands at 1.5 million, official figures reveal. The South East and London, have experienced the largest increases, up by 77% and 71% respectively since 1997.
Across England, the number of households on the housing register has risen from 1,019,475 in 1997 to 1,548,083 - a 52 per cent jump - according to parliamentary answers to questions asked by the Liberal Democrats. As only one new social housing unit is built for every five sold off under the right-to-buy scheme, the supply of council properties for families on the waiting list is dwindling every year. "These figures reveal the massive scale of the housing crisis in this country," said Sarah Teather, the Liberal Democrats' shadow to the Deputy Prime Minister, John Prescott. "With house prices so high that home ownership is just a dream for most people, more and more people are turning to councils for help in finding a home. But every year there are fewer and fewer affordable homes for the people who need them." (The Guardian)
Government announces date for home information packs
The government has announced that home information packs (HIPs) will become mandatory from June 1 2007. On announcing the date housing minister Yvette Cooper said: “Too many sales fall through because of delays and late information, wasting money and causing great stress for buyers and sellers, that’s why we are introducing the packs. We have been working with all parts of industry on the detail and this timetable will give them time to fully prepare.”
(www.odpm.gov.uk)
Paul Samter
Senior Analyst - Economic and Policy Affairs
Home Builders Federation
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