A weekly news summary covering all aspects of the housebuilding industry. Available to members only.
Economic News
Pension Commission findings
The long awaited Pension Commission report recommended that the age of retirement should be gradually raised to 66 by 2030, 67 by 2040 and 68 by 2050, while the state pension should rise in line with average earnings rather than the current benchmark of retail prices. Other recommendations included that employees should be automatically enrolled into funded pension saving, with the option of an opt-out, with minimum contributions of 8% of earnings above the primary threshold, 4% out of individual post-tax earnings, 1% from tax relief and 3% from compulsory matching employer contribution.
(news.bbc.co.uk)
Retailers not expecting to be cheered by Christmas
The Confederation of British Industry (CBI) continued to paint a gloomy picture of the UK’s retailing sector. Its Distributive Trades Survey (DTI) showed a balance of –35% of those surveyed reporting that November sales were down on a year ago, a deterioration from –24% reporting that sales were down year-on-year in November. A balance of –24% expect December’s sales to be below last year’s levels.
John Longworth, Executive Director of Asda and Chairman of the CBI's DTS Panel said: "Any hopes retailers had of an early Christmas present have been dashed. Consumers have been extremely reluctant to spend money, and shops will be crossing their fingers that the predicted cold spell and the rapid approach of Christmas drives people through their doors and gets the tills ringing.”
(www.cbi.org.uk)
Political Events
ONS to be granted independence
Chancellor Gordon Brown announced that the Office for National Statistics (ONS) is to be granted independence from government in his speech to the CBI’s annual conference. Mr Brown said: “Having reviewed the framework for national statistics, I propose to legislate to make the Office for National Statistics independent of government, making the governance and publication of official statistics the responsibility of a wholly separate body at arms length from government and fully independent of it.”
Karen Dunnell, National Statistician and General Registrar for England and Wales at ONS commented: “I welcome this announcement as an important step forward in enhancing the integrity of official statistics. ONS has always worked in an independent, open and transparent way but there has been a perception that this is not so, which has been very damaging for official statistics as a whole. This announcement will increase the public confidence in official statistics. There are many details which will still need to be worked through. ONS will be working closely with HM Treasury on these details and a more detailed plan will be released in the New Year.”
(www.statistics.gov.uk)
Chancellor pledges to address Barker issues in Pre-Budget Report…
Also in his speech to the CBI’s annual conference, the Chancellor pledged to address planning inflexibility and a general response to Barker in the Pre-Budget Report on Monday 5 December.
Mr Brown said: “On planning, which we all know has been inflexible for decades, I will set out in the Pre Budget Report the next stage of our reforms to make planning law and procedures simpler more efficient and more responsive to business and the long-term needs of the economy.”
He also commented: “On housing, we all know that as the economy has grown supply has not kept pace with demand, and in Sir Digby Jones words “constrains labour mobility, and has a negative impact on business and the performance of the UK economy” – issues I will address in the Pre Budget Report, implementing the recommendations of your former economic adviser Kate Barker.”
(www.hm-treasury.gov.uk)
… as Times report that a Planning Gain Supplement will be introduced
The Times reported that the Chancellor will announce a £3 billion windfall tax on land owners who sell their land after obtaining planning permission, known as a Planning Gain Supplement, in the Pre-Budget Report. The Times reported that the tax is expected to be around 20% of the gain made by planning permission being granted. (The Times)
… and the Guardian report that developers will be forced to reveal land banks
The Guardian reported that the Pre-Budget Report will contain measures that will force developers to reveal the scale of their land holdings. Deputy Prime Minister John Prescott commented on the plans: “A lot of ruddy builders shout about planning, but find it more profitable to hold on to land in tremendous land banks. They are on to a dam good thing. They blame planning, but I wish they would tell us how much land they have got in the bank.” The Guardian also report that other measures in the response to the Barker Review could include “giving local authorities a share in the profits when they grant planning permission for privately owned land” (i.e. a Planning Gain Supplement). (The Guardian)
HBF News
HBF stress the need to make the planning process more efficient and flexible
The HBF appeared before the ODPM Select Committee enquiry into affordability and the supply of new housing and said that a more efficient and flexible planning process is needed to ensure the provision of an adequate housing supply, meeting market requirements. The HBF stressed that transparency is needed for any planning gain supplement proposals and that whichever system is implemented, it should not be a disincentive to land being brought forward for development.
Home Information Packs
HBF will be submitting views to the current consultation on detailed regulations for the introduction of Home Information Packs (HIPs). The consultation closes at the end of December and any member wishing to contribute to HBF’s response should contact John Slaughter. HBF will make its response available to members generally at the start of the New Year and is also planning to run seminars in 2006 to provide information to members on the pack requirements and related issues. We will also be seeking to provide guidance on best practice and consumer-facing issues as arrangements for the proposed “dry run” for HIPs proceed.
(www.hbf.co.uk)
Housing Market
House prices flat in November according to Nationwide…
House prices remained unchanged in November, according to Nationwide, causing the annual rate of house price inflation to fall from 3.3% in October to 2.4% in November. Group Economist Fionnuala Earley gave a fairly positive comment for a stable outlook: “Encouragingly, forward indicators continue to suggest that confidence in the market remains. Estate agents are reporting increasing buyer interest and that buyers and sellers are reaching agreement on price more readily. This reflects an overall picture of stability rather than acceleration.”
(www.nationwide.co.uk)
… and Hometrack
Website Hometrack also reported that house prices were stable in November, although this follows 16 months of consecutive falls, with prices 2.5% lower than in November 2004. However, there were also some encouraging signs for the market in Hometrack’s survey, with average number of viewing per sale and the proportion of sales falling through declining.
Director of Research Richard Donnell commented: “A move to more realistic pricing of property over the last year, combined with the cut in interest rates in August 2005 has resulted in some pent-up demand feeding back into the market over recent months. This has pushed up levels of sales activity but had limited impact on average prices which are likely to remain unchanged over the next few months.”
(www.hometrack.co.uk)
… while Halifax report a rise
Halifax reported that prices rose by 1.2% in November, to stand 4.5% higher than a year ago. However, this is not expected to be the start of another period of sharply rising prices. Chief Economist Martin Ellis commented: “The slowdown in UK economic growth over the past year and the historically high level of house prices relative to average earnings are, however, expected to curb the recent improvement in housing demand and prevent another sustained period of sharply rising property values."
(www.hbosplc.com)
Mortgage approvals continue to rise
The number of loans approved for house purchase continued to rise to a seasonally adjusted 113,000 in October, up from 108,000 in September, according to data released by the Bank of England. Approvals have risen continuously since they dipped to a low of 76,000 in November 2004 and now stand 30% higher than in the same month a year earlier.
(www.bankofengland.co.uk)
OECD says UK house prices are overvalued
In its bi-annual Economic Outlook, the Organisation for Economic Co-operation and Development (OECD) claimed that UK houses are overvalued, as judged by evidence from econometric models, affordability indicators (house price to income ratios) and asset-pricing models (a price-to-rent ratio). Ireland and Spain were also cited as having overvalued markets, although most markets studied were not found to be valued above “fundamental levels”.
(www.oecd.org)
Other News
New Code for Sustainable Homes…
The government is to introduce new environmental safeguards for new homes as part of its response to the Barker Review. A new Code for Sustainable Homes will be published, which will set a star rating for energy efficiency and environmental sustainability of new homes. Housing and Planning Minister Yvette Cooper said: “This shows that we can improve environmental protection and build new homes at the same time. By making more efficient use of water and materials and improving the environmental protections in the planning system we will ensure that the new homes we need are built in a more sustainable way.”
(www.odpm.gov.uk)
… which causes the WWF to resign from the steering group
The World Wildlife Fund (WWF) resigned from the government’s steering committee for the Code for Sustainable Homes, citing a backslide “on energy efficiency and environmental standards for homes.” Robert Napier, Chief Executive of WWF-UK said: "We have done our very best to work with Mr Prescott's department, to help them deliver something that would live up to the Deputy Prime Minister's own commitments to sustainable, energy efficient housing. It appears that the recommendations and advice of the Senior Steering Group has been ignored and in a final demonstration of disregard, the members of the Senior Steering Group have not even been given the opportunity to comment on the draft to be published on Monday."
(www.wwf.org.uk)
Construction College opened in Milton Keynes
The Milton Keynes College Construction Centre at Klin Farm was opened to address a shortage of construction skills in the area. The college will provide training for more than 500 sixteen to nineteen year-old students in skills such as bricklaying, plastering and plumbing, after the ODPM provided a grant of almost £1 million. Housing Minister Baroness Andrews said at the opening: “If Milton Keynes is to achieve its growth potential, the construction industry needs the capacity to deliver. This college is not only training young people, it is investing in Milton Keynes by creating employment opportunities that will support the development of new sustainable communities. I wish these students every success and look forward to hearing of their progress as they enter the workforce.”
(www.odpm.gov.uk)
Cutting edge training course for planners launched
After a £250,000 award from the ODPM, the University of the West of England launched a desktop training course for planners to train them in the skills to deliver well-designed communities. Planners will be trained to implement the new spatial planning system without having to leave their office. Visiting the University to launch the course, Baroness Kay Andrews said: "We recognize that planners need support and training to deliver the new system of spatial planning, with its focus on partnership working and community consultation. But planners can't always spare long periods out of the office to attend courses at universities or colleges, so ODPM has made £250,000 available for UWE to deliver a distance-learning course in spatial planning that planners can access from their desktops. I urge every Chief Planning Officer and Chief Executive to give their staff the opportunity to benefit from this flexible and innovative course."
(www.odpm.gov.uk)
CPRE’s Pre-Budget Report briefing
The Campaign for the Protection of Rural England (CPRE) published its own briefing on the expected announcements in the Chancellor’s Pre-Budget Report. The CPRE questions the need to raise the level of home building to the Barker targets “with all the environmental and infrastructure costs that would bring”. The CPRE believes that the proposed Planning Gain Supplement could create a “real danger that the higher potential planning gain contribution from greenfield sites could create a perverse incentive for local authorities and communities to favour such development, especially if the money were retained locally.”
(www.cpre.org.uk)
Paul Samter
Senior Analyst - Economic and Policy Affairs
Home Builders Federation
For daily news updates for the housebuilding industry from Housebuilder magazine go to www.house-builder.co.uk