A weekly news summary covering all aspects of the housebuilding industry. Available to members only.
Economic News
The economy grew by 0.4% in the third quarter
The economy expanded by 0.4% over the third quarter, according to the preliminary estimate of Gross Domestic Product released by the Office for National Statistics. The economy grew by 1.6% over the year to the third quarter, a slight increase in the annual rate of growth from 1.5% in the second quarter. Manufacturing output rose by 0.4% over the quarter, although the output of all production industries contracted by 0.6%. The business services and finance sector expanded by 0.7%.
(www.statistics.gov.uk)
MPC unanimous on decision to hold rates...
The minutes of the Bank of England’s Monetary Policy Committee (MPC) Meeting on 5/6 October revealed that the decision to leave the repo rate unchanged at 4.50% was unanimous amongst all nine members of the Committee. The minutes noted that November’s Inflation Report would give the Committee an opportunity to analyse effect on potential supply of “the supply effects of oil on the one hand, and migration on the other”. The MPC expects the direct impact of oil on the target measure of inflation to fade towards the end of the year.
(www.bankofengland.co.uk)
... and there is a change on the Committee
The Bank also announced that Deputy Governor for Financial Stability, Sir Andrew Large, is to leave in January next year to return to the private sector. Sir Andrew will be replaced at the Bank by Home Office Permanent Secretary Sir John Gieve. Sir John was previously in charge of financial regulation at HM Treasury.
(www.bankofengland.co.uk, Times, FT)
Inflation continues to rise
The Bank of England’s target measure of inflation, the Consumer Prices Index (CPI), rose to 2.5% in September, from 2.4% in August and 1.6% at the turn of the year, largely due to the continued rise in the price of petrol. However, there were counterbalancing influences from clothing and footwear, and inflation was marginally below most analyst forecasts. The former target measure, RPIX (Retail Prices Index excluding mortgage interest payments), matched the CPI at 2.5%, after having fallen below the CPI for the first time in August.
(www.statistics.gov.uk)
Official figures show rise in retail sales in September
There was a 0.7% rise (seasonally adjusted) in the volume of retail sales between August and September, according to official data released by the Office for National Statistics. Sales volumes were 0.4% higher in the third quarter than in the second quarter and stood 1.0% higher on a three months basis in comparison to the same three months a year earlier.
(www.statistics.gov.uk)
ITEM club cuts growth forecast
The Ernst and Young ITEM Club cut its forecast for economic growth for 2005 to 1.6%, broadly in line with most independent forecasters, in its Autumn “Economic Outlook for Business”. The club commented that ”the necessary retrenchment in the household sector is proceeding steadily” and the club “is cautiously forecasting that GDP growth will pick up to 2.2%” next year. Interest rates are expected to remain at 4.50% for the foreseeable future, but the uncertainty surrounding this call was highlighted.
The ITEM club also comment that: “The housing market and the high street have been remarkably robust, but are actually more vulnerable than they were three months ago. Short-term, should they weaken, they are unlikely to be bailed out by the MPC.”
(www.ey.com)
Political Events
Chief Executive of the new Academy for Sustainable Communities revealed
Dr Gill Taylor was announced as Chief Executive of the new Academy for Sustainable Communities, by Deputy Prime Minister John Prescott. The Academy will be based in Leeds and will work to ensure that there are sufficient people with skills and knowledge to deliver and maintain sustainable communities.
Dr Taylor said: “In the coming months, I will focus on setting up the Academy and working with the Board and key stakeholders to establish a clear, shared vision to guide our work. In particular, I am excited about the opportunities the Academy gives to drive forward the sustainable communities agenda in a practical way, adding value to the work of a wide range of stakeholders.”
(www.odpm.gov.uk)
Housing Ministers attacks anti development lobby
Housing and Planning Minister Yvette Cooper wrote article in the Guardian on 18 October in response to the anti-development lobby.
Ms Cooper commented: “In place of Nimbyism, some conservative campaigners are now going Bananas. Where once they accepted new development, just Not In My Back Yard, they now argue for Building Absolutely Nothing Anywhere Near Anyone. “
She also said: “Social justice and economic prosperity demand more homes. Over the past 30 years we have seen a 30% increase in households and a 50% drop in new homes built. Considering this widening gap between demand and supply, it is little wonder that the long-term trend for house prices is so much higher than in other countries - as the Barker report set out. Demand will go on rising too. We have an ageing and growing population. Today, more than 50% of 30-year-old couples can afford their own homes. At current building rates, in 20 years that will have fallen to nearer 30%.” (Guardian)
Company News
Bellway announce a rise in profits
Bellway reported preliminary results for the full year to 31 July on October, revealing a 6.2% rise (compared to the previous twelve months) in pre-tax profits to £218.2m on turnover of £1,178.1m. Bellway sold a total of 7,001 homes over the year, 5.9% more than the 6,610 that were sold in the previous year. The landbank was increased by 1,800 plots to a total of 22,500 plots.
Chairman Howard Dawe gave a fairly upbeat comment on current trading. He said that “in the first two months of this current financial year, reservations have shown an encouraging increase of 4%” and furthermore “outlets will increase in the second half” but “are unlikely to benefit 2005/06 significantly”.
(miranda.hemscott.com)
Housing Market
RICS report an upturn in housing demand…
The Royal Institution of Chartered Surveyors (RICS) September housing market survey showed a fourth consecutive monthly improvement in the balance of surveyors reporting falling prices, to the strongest reading for 14 months. A net balance of –21% of surveyors reported that prices had fallen in the three months to September. This is a considerable improvement from a low of –46% seen in May this year. The balance of surveyors expecting prices to rise over the next three months turned positive for the first time since May 2004. The average number of sales per estate agent edged up very marginally to 22.7 in the three months to September, a measure that has steadily risen from a low of 21.2 in the three months to February.
The level of new buyer enquiries rose for the fourth consecutive month in September. In contrast, there was a fall in the number of new instructions to sell properties, the first reduction in new instructions since March 2004.
(www.rics.org.uk)
… as Rightmove report a rise in prices
Rightmove reported that asking prices rose by 0.5% in the four weeks to 8 October, following on from three monthly falls, leaving prices 1.5% higher than a year ago. Rightmove also highlighted that the number of unsold property stocks fell as the “gap narrows between sellers’ asking price expectations and buyers’ ability to pay.”
Commercial Director Miles Shipside commented: “After five years of booming house prices, followed by a year-long worry about a crash, we appear to have had a ‘soft landing’. Now we have touched down at a sustainable level of pricing, buyers and sellers are gaining in confidence. However, don’t expect the market to take off again until a refuelling by more first time buyers, lower mortgage rates, and a continuation of realistic pricing by sellers and their estate agents”.
(www.rightmove.co.uk)
Mortgage Lending continues to recover
Gross mortgage lending rose by 4.3% in September to £28.1bn to stand 11% higher than a year ago according to figures released by the Council of Mortgage Lenders (CML). The CML commented: “Since the beginning of the year we have witnessed a relatively steady recovery in mortgage lending activity and until recently this had mainly reflected seasonal factors. While we continue to believe that the housing market is on course for a "soft landing" from the exceptional highs of 2003/04, recent months have seen strong growth in mortgage lending, boosted by high levels of remortgaging as people take advantage of lower interest rates and switch onto cheaper deals.”
(www.cml.org.uk)
Other News
ICE wants more flexibility in the layout of estates
The Institute of Civil Engineers (ICE) published their assessment of the UK’s infrastructure in the “State of the Nation 2005”. Of particular interest to the industry was the ICE’s support for the government’s competition to build a home for £60,000 and the decision to allow rural authorities to set aside land purely for affordable housing to meet local needs. The ICE also commented: “The planned expansion of housing in the south and south east of England will require flexibility in the layout of estates to meet the needs of communities. Current, inflexible guidance on the design of residential roads and footpaths is due to be replaced by ’The Manual For Streets’, which will help to achieve the aims of sustainable development. This manual should be introduced as soon as possible.”
(www.ice.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
HBF News
Members are invited to attend the Nottingham Trent Debate and industry prize giving, to be held in at the DICE centre at Nottingham Trent University at 10.30 a.m. on Thursday 24 November 2005. The event is free to attend. The theme of the debate this year is “Is it too difficult to integrate good quality design consistently across the whole housing output?” Members who would like more information or to book a place should contact the HBF Events Team on 020 7960 1646 or email events: events@hbf.co.uk