A weekly news summary covering all aspects of the housebuilding industry. Available to members only.
Economic News
Second quarter economic growth revised up
The revised estimate of second quarter Gross Domestic Product growth saw a modest upward revision. The economy was estimated to have grown by 0.5% over the quarter (compared to a preliminary estimate of 0.4%), meaning that the economy expanded by 1.8% over the last year. The manufacturing sector shrunk by 0.3% over the quarter, while the services industry grew by 0.6%. Household expenditure rose by 0.2% and gross fixed capital formation increased by 1.5%. (www.statistics.gov.uk)
Political Events
Evaluation of Starter Home Initiative
The ODPM published an evaluation into the effectiveness of the Starter Home Initiative (SHI), which was commissioned in November 2003. The report was generally positive about the scheme and made a several key recommendations. These include a need for more high quality written information and common branding of the scheme. It also called for better understanding and knowledge of key workers’ aspirations, needs and family circumstances. The report recommended that the scheme should be flexible enough for eligible employers to be able to offer it to all relevant groups within their workforce. (www.odpm.gov.uk)
Evaluation of Key Worker Living
The ODPM published initial findings into the evaluation of Key Worker Living (KWL). In terms of the government initiatives to increase home ownership, the report commented that Homebuy is valued for its flexibility, but “does not – in the short and medium term – increase the supply of housing.” There had been less take up of shared ownership than Homebuy, possibly due to a lack of current availability, as new build housing is still being developed. (www.odpm.gov.uk)
Company News
Housebuilders likely to benefit from Housing Corporation money
The Housing Corporation has named several housebuilders in a shortlist of groups bidding for £3.9 billion of public money. It is the first time that commercial organisations will receive housing corporation money for affordable housing. The housebuilders shortlisted are: David Wilson Homes, Lovell Partnerships, Persimmon Homes, Westbury Homes, Miller Homes, Fairclough Homes Group, Bellway, George Wimpey, Keepmoat, Fairview New Homes, Gleeson Regeneration, The Berkeley Group and Barratt Developments.
Richard Hill, the Housing Corporations director of programmes, said: “Private developers, alongside our established housing association partners, have the potential to make a massive contribution to the supply of much-needed affordable homes in England and I am delighted that so many have risen to the challenge by pre-qualifying for this competition.” Detailed bids need to be submitted to the Housing Corporation by early October, with a final decision expected in early 2006. (www.housingcorp.gov.uk)
Housing Market
Small fall in house prices in August reported by Nationwide…
Nationwide reported that house prices fell by 0.2% in August, to stand 2.3% higher than a year ago. Prices have risen in eight months of the last twelve months. Fionnuala Earley, Nationwide's Group Economist, commented: ““In spite of a fair deal of bearish comment, the housing market has remained quite resilient this year following last year’s interest rate hikes. Price inflation has slowed gradually, but is still positive, and activity has been creeping up since the end of 2004.” (www.nationwide.co.uk)
… and by Hometrack
Website Hometrack reported that house prices fell by 0.1% in August, the fourteenth consecutive monthly decline. Prices now stand 3.7% lower than they were in August 2004. Hometrack reported that market activity increased by 4.1%, following a 3% increase in July. However, an increase in the number of properties coming onto the market and fewer new buyers coming onto the market “means that it is still a buyers’ market and prices will inevitably decrease again in the coming months.” Sales prices remained at 93.4% of asking prices. (www.hometrack.co.uk)
Mortgage approvals remain stable in July
Figures released by the Bank of England show that the number of mortgage approvals was virtually unchanged at a seasonally adjusted 97,000 in July, a figure that has remained remarkably stable since April. With the end of the surge in activity in the first half of 2004 having dropped out of the annual comparison, approvals were down just 2% compared to July 2004. This annual comparison has improved considerably since it hit a low of down 42% year-on-year last October. (www.bankofengland.co.uk)
Other News
Shelter challenges assumptions of home ownership aspirations
Research commissioned by charity Shelter challenged what it describes as “the myth that we are a nation obsessed only with getting on the property ladder.” A YouGov survey, focusing on people on low incomes, asked respondents to cite the three aspects of their home that are most important to them. A cumulative 72% said feeling safe in their neighbourhood (i.e. the total of those that ranked this as first, second and third most important) was the most important aspect of their home, with 40% rating affordability as most important and 39% ranking ownership as most important.
However, when people were asked what they would like in relation to their home that they didn’t have, 59% of those renting in the social sector said they would like to own their own home and 63% of those who rented privately said the same thing.
Shelter’s Director of Campaigns commented: “Our research looked at the bigger picture and found that people’s first priority for themselves and their children is not home ownership – but having a safe, decent home they can afford.” (www.shelter.org.uk)
Online investing comes to the buy-to-let market
Online property exchange Orpomark has brokered the first internet buy-to-let investment. A £104,000 one-bedroom terrace cottage in the Leeds suburb of Horsforth has been bought by 65 web-surfing investors. The average individual investment in the house was only £1,600, with the smallest investor buying just one share for £1. Orpomark identifies suitable properties for sale and when it has lined up sufficient interest, packages them into companies that issue tradeable shares.
Opromark’s founder, Stephen Kenny, said: “If you want to invest in residential property, you no longer have to do it in chunks of £100,000 or more.” The company makes its money by taking commission of 1% of the selling price paid by the property vendor, an annual listing fee of 0.5% of the value of the property and trading fees on each share transaction on a sliding scale of 0.25 to 3%. It hires letting agents and management companies to find tenants and maintain properties. (Times)
HBF moves Northern Office
HBF’s office covering the North East, North West and Yorkshire & Humber regions is moving to: Brooklands Court, Tunstall Road, Leeds, LS11 5HL.
Tel: 0113 2727573, Fax: 0113 2727574. The new office should be up and running by Friday 9th September.
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
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HBF