A weekly news summary covering all aspects of the housebuilding industry. Available to members only.
Political News
RIP the HIP? - Government U-turn on Home Information Packs
The Government announced that the Home Condition Report (HCR), the most contentious part of the Home Information Packs due to be made compulsory from June next year, will no longer be a mandatory part of the pack. The Department for Communities and Local Government (DCLG) said that “The Government is keen to avoid risks to consumers from industry delays and potential late changes to the implementation timetable next year.” The take up of HCRs will be promoted on a market-led basis. While the mandatory introduction of HCRs “remains on the table”, the Government “wants to encourage a market led take up first”.
The DCLG also confirmed that energy efficiency information, in the form of an Energy Performance Certificate, will be the priority in the introduction of HIPs, with homes to get A-G ratings and a practical list of measures to cut fuel bills. (DCLG Press Release)
… as the Conservatives call for scheme to be abandoned entirely
Shadow Minister for Housing and Planning Michael Gove called for the Government to abandon HIPs entirely. Mr Gove said: “The Government should abandon the whole scheme and consult afresh, rather than move ahead with a vanity project to save ministers' faces. The Government's ongoing plans for Home Information Packs are now a complete shambles. After the U-turn on police mergers and the delay over Identity Cards, this is the third Whitehall farce in a week." (Conservatives' Press Release)
… but PGS has not been shelved, despite reports to the contrary
The DCLG issued a scathing statement in response to accusations that the proposed Planning-gain Supplement is to be abandoned: “This is absolute nonsense. The article in Estates Gazette (15 July 2006) refers to a meeting between Yvette Cooper, John Healey and John Walker that has not taken place. In fact, John Healey and Yvette Cooper have never even met Mr Walker to discuss PGS. The Government has consulted on proposals for Planning Gain Supplement and the Chancellor made clear that we will make further announcements by the end of the year.” (DCLG Press Release)
Minister promotes good design
In a speech at the 2006 Housing Design awards, Secretary of State for the DCLG Ruth Kelly championed the use of the planning system to promote good design. Ms Kelly said: “I will use my powers to prevent poor design and I urge all local planning authorities to do the same, applying their planning policies rigorously to make it clear that the quality of design will be a key when considering proposals for new development.”
Ms Kelly said that “the planning system is a powerful tool and I want to see it used effectively to help us reach the necessary high standards of design. Planning authorities should plan positively for the achievement of high quality and inclusive design for all development. That is clearly stated in our planning policy in PPS1, and should be the aim of all involved.” (Minister's Speech)
Economic News
Inflation rises sharply
The Bank of England’s target measure of inflation, the Consumer Prices Index (CPI), rose to 2.5% in June, up from 2.2% in May, and above the centre of the target range of 2.0%, +/- 1.0%. Other than a brief spike, when CPI inflation hit 2.5% in September 2005, this is the highest rate of inflation in almost nine years.
The most significant factors behind the rise in the CPI came from housing, water, electricity and other fuels. The recent tariff increases from a number of major suppliers saw electricity and gas bills increase. (June CPI Release)
Economic growth hits a two year high
The rate of economic growth picked up in the second quarter. Gross Domestic Product rose by 0.8% from the first to the second quarter, accelerating from a revised rate of 0.7% in the preceding three months. This is the fastest rate of quarterly growth for two years, and the economy had expanded by 2.6% in comparison to the same quarter a year earlier. This is a little above what is considered to be the trend rate of growth of 2.5% per year.
The manufacturing sector grew by 0.5% over the last quarter, while the services sector expanded by 1.0%. (Preliminary Q2 GDP Release)
Retail sales growth hits 18 month high
The volume of retail sales rose by a seasonally adjusted 0.9% between May and June to stand 3.6% higher than a year ago. For the second quarter as a whole sales volumes rose by 2.1% from the first quarter and 3.6% compared to the second quarter a year ago. This is the fastest rate of annual increase since the beginning of 2005. (June Retail Sales Release)
Corporate News
McCarthy board back takeover offer
The Board of McCarthy and Stone announced that it had reached an agreement on terms offered in a takeover bid by Permira Advisers LLP and Barclays Capital PIA. There had been speculation of a number of bidders for the company in the financial press. The Board accepted a bid valuing the company at £1.028bn and the proposals will be put to shareholders at an EGM to be held “as soon as reasonably possible.
Keith Lovelock, Chairman of McCarthy & Stone, said: "I am very pleased to announce the offer from Barclays Capital and Permira today. Compared with the other approaches we have received, we believe the offer provides certainty for shareholders and the company at a value which fairly reflects the strengths inherent in the business. The offer represents the culmination of a sustained period of value creation for shareholders, represented by total shareholder return of 280% since 1 September 2001, the equivalent of an annual return of approximately 24% over the same period. By any measure this has been an excellent performance. I would like to extend my thanks and appreciation to all the staff at McCarthy & Stone who have generated this value through their hard work and dedication and I wish them continued success in private ownership.” (McCarthy and Stone Press Release, Financial Times 18 July)
Housing Market
House price growth continues to accelerate according to RICS…
The Royal Institution of Chartered Surveyors (RICS) revealed a further acceleration in house price growth in its June Housing Market Survey. RICS reported that a balance of +28% of surveyors said that prices rose in the three months to June, up from +20% in the May Survey and the largest balance reporting an increase since May 2004. RICS reported that the rise in prices was “strongly influenced by a mini-boom in London and the South East”, with the picture elsewhere in the country much more subdued.
The level of new buyer enquiries rose in June, for the twelfth consecutive month. A balance of +17% of estate agents reported that the number of enquiries rose in June, a slight slowing from +22% in May. However, there were signs that the market is tightening with a marginal decline in the number of new instructions to sell. A net -1% of those surveyed said that they received fewer instructions to sell than in May. (RICS June Housing Market Survey)
… and Rightmove
Rightmove reported that house prices rose 2.9% in the four weeks to 8 July, the largest monthly rise in the index for almost five years, as the annual increase accelerated from 6.4% to 10.6%, the fastest rate in sixteen months. Rightmove noted that the southern market was particularly strong “as demand continues to outstrip supply”. (Rightmove July House Price Index)
Other News
Average house price to reach nearly £300,000 in five years
The average house price in England will be £286,500 in 2011, compared to a current £195,000, according to forecasts from Oxford Economic Forecasting, commissioned by the National Housing Federation (NHF). The NHF called for around 80,000 affordable new homes to be built a year to avert a housing crisis.
NHF Chief Executive David Orr said: “Crisis is an over-used word but I make no apology for using it: we are already in crisis and this report shows that things are set to get worse. High house prices are already having a disastrous effect on local communities. Over the next five years we’ll see home ownership being pushed further out of the reach of middle earners and even those on relatively high incomes. Housing associations are part of the solution. They already build and refurbish around 40,000 homes a year for people unable to afford a home at market rates. But up to 80,000 new affordable homes a year are needed to stop our housing timebomb exploding. It’s vital that the Government makes affordable housing a priority in next year’s Comprehensive Spending Review, and brings in planning reform to speed up the delivery of affordable homes in mixed communities.” (NHF Press Release)
Housing Market Intelligence 2006
October 10, Business Design Centre London N1
Now in its fourth year, Housing Market Intelligence has been tracking and predicting the trends and opportunities in housebuilding through one of the most dynamic periods of change and uncertainty in the industry’s history.
This year HMI aims to help delegates and readers in ‘building profits in housebuilding with greater certainty’.
The Conference will be chaired by NHBC Chief Executive Imtiaz Farookhi. The line-up of speakers includes:
John Callcutt, English Partnerships
Stewart Baseley, HBF
Richard Donnell, Hometrack
John Stewart, HBF
Professor Melanie Howard, Future Foundation
Yolande Barnes, Savills
Christopher Hill, ABN, Amro
For further details please email events@hbmedia.co.uk or call the Events team on T: 020 7960 1646
Consultation/Key Publication Dates
Code for Sustainable Homes Implementation Autumn
Home Information Packs (HIPs) Revised Regulations published 14 June
HIPs - 10 to 12 planned trials Autumn 2006
HIPs Introduction 1 June 2007
Consultation on DCLG structure June 2006
Implementation of new DCLG structure September 2006
HBF Events
HBF Annual Planning Conference 14 September
Housing market Intelligence 2006 10 October
For a full list of HBF events please visit HBF Events & Meetings
For details of HB Media events click here
Paul Samter
Senior Analyst - Economic and Policy Affairs
Home Builders Federation
Housebuilding 2006
10 and 11 October 2006, Business Design Centre, London N1
Now in its third year the exhibition, housing market intelligence conference, management conference programme, free briefings and the Housebuilding Innovation Awards bring together all that is new in the housebuilding industry.
Visit http://www.housebuilding2006.com/ for more information.
Pre-register today to be entered in to a prize draw to win two trips to the Ashes Down Under (match tickets, flights and accommodation)