A weekly news summary covering all aspects of the housebuilding industry. Available to members only.
HBF News
HBF meet Liberal Democrat ODPM spokesman
HBF Director of External Affairs, John Slaughter, met Andrew Stunell MP, the new Liberal Democrat Shadow Cabinet member for ODPM affairs, on 19 April. Mr Stunell was interested in the HBF’s position on all the main current issues, particularly Planning-gain Supplement and the Code for Sustainable Homes and took note of HBF’s views on the introduction of Home Information Packs. We also briefed him on the problems connected with the Thames Basin Heaths Special Protection Area. Mr Stunell asked to be kept closely in touch with the development of HBF’s thinking on all these issues.
Michael Gove meets Yvette Cooper on Thames Basin Heaths
Stewart Baseley was invited to participate in a meeting between Conservative Shadow Housing Minister, Michael Gove MP, and Housing Minister Yvette Cooper to discuss ways of resolving the Thames Basin Heaths problem. The meeting was constructive, although all parties recognised the difficulties in finding a workable short-term solution as well as a longer-term mitigation agreement that could be adopted through the planning system. HBF is following up the meeting by holding further discussions with ODPM officials, the Government Office for the South East and local authorities to focus on shorter-term initiatives for lifting current local planning freezes.
Economic News
Inflation drops below target
The Bank of England’s target rate of annual inflation, the Consumer Prices Index (CPI), fell to 1.8% in March from 2.0% in February, the lowest level for a year. The CPI is now slightly below the centre of the Bank’s target rate of 2.0%, +/-1.0%. The largest downward effects on inflation came from food and non-alcoholic beverages, while there were also downward effects from transport, with the pump price of petrol little changed in the month, and a fall in the cost of air fares. (Consumer Prices Indices)
Voting pattern on the MPC remains unchanged
The minutes from the Bank of England’s Monetary Policy Committee (MPC) meeting on 5/6 April revealed that just one member of the Committee, Stephen Nickell, voted for a 25 basis point cut in rates, while the remaining seven members voted for no change. The MPC is currently one short on its quota of nine members after the announcement that Richard Lambert is to take charge at the CBI. David Blanchflower, Economic Professor at Dartmouth College in the US is due to attend his first meeting as an MPC member in June.
Stephen Nickell has been the sole dissenting voice in recent meetings. The minutes reveal that the Committee believes that “output growth had continued to grow at or around the trend rate, although there remained a small downside risk to the near-term outlook”. (Minutes of April MPC Meeting)
Political News
Review of housing and regeneration announced
The ODPM has announced a review of the institutional structure for delivery of the Government’s housing and regeneration programmes. The review will look at organising delivery mechanisms to maximise the use of private investment, public subsidy and land holding and assets funded by previous Government investment to help deliver new homes, improve existing homes and create mixed and sustainable communities. Questions for the review to consider include the scope for new approaches to investment to increase the supply of affordable homes, if a new agency could be developed to bring in private sector investment, how to make the most of private money, public land holding and existing assets, how a new agency could work with local and regional partners and what functions might be devolved from the ODPM on any new institutional environment. The closing date for responses is Friday 19 May.
Local Government and Communities Minister David Miliband commented: "In the successful programmes of English Partnerships and the Housing Corporation we have a strong foundation. But this Review is about much more than just the Housing Corporation and English Partnerships. It is about looking at how we can make more of the resources at our disposal and how we can bring innovative solutions to the challenges we face." (ODPM Press Release)
HBF Note: It is widely believed that the review will be considering the scope for merging English Partnerships and the Housing Corporation. HBF is seeking the clarify the scope of the review in order to inform a submission on relevant issues to government.
Conservatives accuse the Government of planning to concrete over back gardens
The Conservatives accused Deputy Prime Minister John Prescott of planning to “concrete over Britain’s gardens” in providing £2m for an investigation into urban densification, as part of the party’s “Vote blue, Go green” local election campaign.
Shadow Local Government Minister and Deputy Conservative Chairman Eric Pickles said “Britain's open spaces are now under real threat from John Prescott's bulldozers. Labour claim they want to regenerate urban sites, yet sneakily they don't even class back gardens as 'green' space. Councils are increasingly powerless to protect against growing suburban sprawl and ugly 'densification'. Local councillors should be able to stop blocks of flats being dumped in neighbourhoods if out of character with the area.“ (Conservatives Press Release)
Housing Minister stresses the need for more homes
On BBC2’s Daily Politics show, Housing Minister Yvette Cooper highlighted the gap between the projected increase of over 200,000 extra households per year over the next 20 years in England and the current build rate of around 160,000 homes per year. Ms Cooper said: “And when you have got a gap like that between growing demand and the level supply of new homes you will see house prices continue to go up”, adding “we have got to build more homes”.
Ms Cooper stressed that the focus for new development would be on brownfield sites, while also noting that the idea “that the South East is full up is just not true”. The Minister observed that the South and South East actually has one of the lowest rates of urbanisation compared “to all kinds of other countries”. (BBC)
ODPM dismiss second home tax increase
The Government issued a statement denying that it had any plans to increase council tax on second homes, following press speculation that it was examining the issue. (ODPM Statement)
Corporate News
Persimmon confident on the market outlook…
In an AGM statement, the UK’s largest home builder Persimmon gave an upbeat view of the market, expressing confidence of “achieving results for 2006 in line with our expectations”. The number of site visitors to the company’s developments remained high, cancellation rates have returned to historically low levels and prices remain firm and are expected to rise by around 3-4% over 2006. As had previously been announced, Group Chairman Duncan Davidson retired at the meeting, with Group Chief Executive John White taking over the role, while Mike Farley takes over from Mr White. (Persimmon's AGM Statement)
… as are George Wimpey
George Wimpey also painted a positive picture of the market at its AGM. Chairman John Robinson commented: “As we reported at the time of our preliminary results we were encouraged by signs that buyer confidence was returning to the UK housing market. In the weeks since then these trends have continued. Sales rates to date have been well above those experienced in 2005 and we have seen a return to price increases in selected locations, particularly in the South.” (George Wimpey's AGM Statement)
Housing Market
House prices rise according to RICS…
The Royal Institution of Chartered Surveyors (RICS) revealed that estate agents reported that prices rose in the three months to March, the fifth successive survey that has seen a rise. A balance of +13% of estate agents reported that prices rose, representing a slight slowing in the pace of increase from the +16% reporting a rise in the February survey. RICS commented that: “price rises in London slowed sharply in March, as some of the impact from City bonus payments faded.”
RICS also reported that buyer interest continues to rise. A balance of +10% of estate agents said that the number of buyer enquiries rose in March, the tenth consecutive month of rising buyer in interest, a record for the RICS survey. The rate at which new properties are coming onto the market also rose in March. A balance of +13% of estate agents reported a rise in new instructions to sell property, the strongest reading since last June. (April RICS Housing Market Survey)
… and Rightmove
Rightmove reported that house prices rose by 1.1% in the four weeks to 9 April, to stand 4.1% higher than a year ago. Rightmove described the rise as led by a “mini-boom” at the upper end of the market, with the more affluent southern areas “consistently outperforming the national average”, although there were “early signs of the spring surge losing momentum”. (Rightmove April House Price Index)
… while NAEA also report higher activity levels
The National Association of Estate Agents reported that housing sales rose for the third month in a row in March. Sales were reported up 40% since January, with a 16% increase in March. The first-time buyer share of the market was reported to have risen from 7.8% to 8.9%. NAEA President, Christopher Hall, commented: “It is wonderful to see confidence from both buyer and seller return to the housing market. The market is back on track, following a slight cooling-off and dip in 2005, the picture for 2006 is very positive indeed. I am delighted to see an increase in first time buyers and pray that this continues. Going forward, I would like to see more new instructions so that supply continually meets demand curbing boom prices and allowing the industry to continue to steadily grow.” (NAEA March Survey)
Other News
Britain protects a degraded countryside at the expense of first-time buyers
Despite not having enough houses, Britain continues to protect a degraded countryside, benefiting comparatively few and preventing thousands from getting on the housing ladder, according to a report from free-market proponent think-tank the Adam Smith Institute, “Land Economy - How a rethink of our planning policy will benefit Britain” by Mischa Balen.
The planning system itself is cited as a “bureaucratic process too inflexible to respond to changing economic circumstances in the way the market can”, with planners not having “the requisite knowledge to take account every change in the economy”. The alternative process proposed to the current planning system is an increased reliance on Restrictive Covenants and Nuisance Laws. Such laws are aimed at “protection against harm to a property even if it cannot be objectively measured”. (Full Report)
Consultation/Key Publication Dates
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
Part L Implementation date 6 April
Housing and Regeneration Consultation Closes 19 May
HBF Events
Annual General Meeting and Luncheon 25 April
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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