A weekly news summary covering all aspects of the housebuilding industry from Pierre Williams, the HBF's head of media. Available to members only.
Prices fall at their fastest for a decade
30 percent more surveyors are reporting prices falling than rising according to the latest figures from Rics. And most believe the situation is set to worsen before it starts getting better. However, the organisation is confident there will be no wholesale slump – a view shared by Ernst & Young which believes the chances of a crash are “remote”. A spokesman for Rics said: “Our findings show that 42 percent of our members have reported steep price falls over the last few months and our records show these are the steepest for over nine years.” Rics figures showed falling prices in every region bar Scotland and stocks of properties on the market have risen to their highest level for nearly a year. Buyer enquiries fell for the fifth consecutive month. A second report from the National Association of Estate Agents said prices fell by 1.6 percent last month – the fourth consecutive monthly drop, bringing annual price prices down to 7.95 percent. The Council of Mortgage Lenders has also reported the first year-on-year drop in mortgage lending for four years and the number of new mortgages tumbled again to 99,000 – down from 130,000 in July. (Times, Express)
FTBs offered loans of nine times salary
In an effort to enable first time buyers to get a foot on the ladder, Bristol & West is offering them mortgages of up to nine-times salary by taking their parents’ earnings into account. Under the new deal, both the FTBs and their parents would share both the payments and responsibility for the loan. It would also negate the need for parents to take out a second mortgage on the family home to provide their children with a deposit. A spokesman for Bristol & West, said: “Many first time buyers have given up hope of buying their own home. Parents want to help their children without jeopardising their savings. This mortgage provides a sensible solution.” (Mail)
Industry calls for rate reprieve
The CBI has urged the Bank of England not to raise interest rates, warning that the costs of power supplies to industry are forecast to rise by £5 billion next year, posing a serious risk to manufacturing recovery. Ernst & Young has predicted the economy will expand 2.8 percent next year – a cut from its previous estimate in the wake of higher borrowing costs. (Telegraph)
HBF note: The message certainly has been heard loud and clear. Minutes of the last meeting of the Monetary Policy Committee show a unanimous vote to peg rates at 4.75 percent. And for the first time in a year, the option of raising rates was not even discussed.
Taywood cuts sales forecasts
Taylor Woodrow has cut sales forecasts for 2004 from 10,000 to 9,400 units, blaming “continuing negative media speculation” for causing prospective buyers to procrastinate. The company said it would meet profits targets for the year but said the market has “reverted to a lower level of activity compared with the extremely strong performance in the second half of 2003”. CEO Iain Napier said he was confident there would be no slump but cautioned that the whole sector would feel the slowdown. “There is little doubt others will feel the pain,” he said. “We trade on the same sites as our competitors, we are all in the same boat and the market is slowing down.” Shares fell 8p to 235p on the news and other large housebuilders also saw slight share falls. (All media)
HBF note: There’s little doubt that media speculation about the health of the market is causing buyers to be jittery. But it’s worth noting that some journalists are considerably less pessimistic than investors. Here’s what Phil Aldrick of the Telegraph says: “Why invest?….demographics remain favourable and the better builders are a step ahead of the market, with long land banks and a focus on lower cost housing where demand is stronger than ever… Taywood is one of the safer housing bets …if you’ve got the stomach to hang on.”
Average home price rises 5,000 percent in 40 Years
The government will have a job persuading the public not to see their homes as their pensions after figures released this week show average home prices rose 4,950 percent over the past 40 years. This equates to an average annual increase of 10.3 percent, dwarfing annual retail price inflation of 6.6 percent over the same period. These findings, compiled by the Halifax, suggest housing is a rock-solid investment bet. The figures also show that previous market “crashes” are far more benign than most people think. The only years to see price falls since 1964 were 1990-3 when values fell 1.3, 1.4, 3.8 and 2.5 percent. (Guardian)
HBF note: These are very useful figures to calm jittery potential buyers. And they add real weight to the Barker Report, highlighting long-term undersupply as key to long-term house price rises.
Bellway sees urban regeneration future
Bellway is increasingly turning to urban regeneration schemes to cushion itself from the housing market’s possible hard landing. CEO John Watson is looking to expand social housing to 10 percent of group turnover, is looking to boost volumes to 7,000 units next year and has started projects in the one of the Government’s pathfinder areas in Liverpool. Watson said the low selling prices, which would start at £40,000, would also give extra protection from any slowdown. “There is a large demand at the bottom of the market for first time buyers that is not being met and if we can keep prices down we can take advantage of that.” The strategy announcement came as the group announced excellent results for the year to 31 July. Turnover was up 14.5 percent to £1.1 billion; volumes increased five percent and average selling prices were up from £149,700 to £161,400. Pre-tax profits rose 21 percent - ahead of forecasts and 66 percent of next year’s volumes are already sold or reserved. (FT, Express)
HBF note: Everything seems covered here. Aiming for the right markets in the right areas, concentrating on brownfield and pathfinders….no wonder the FT comments: “If the housing gravy train is heading to the sidings, investors could do worse than to be on board Bellway.”
Plans for 478,000 new homes in east approved
Regional planners for the east of England have agreed plans for 478,000 new homes for the region by 2021 on condition of delivery of £1.6 billion of funding over the next three years for subsidised housing and infrastructure improvements. Government plans for a further 18,000 homes in the M11 corridor were rejected, ostensibly because they would damage the environment and threaten water supplies. John Reynolds, the panel chairman, said: “We have agreed that communities across the east of England can take another 478,000 homes but only if the government is prepared to stump up for the required infrastructure to support them.” (All media)
Hedgehog-friendly homes prove a hit for Bovis
A dedicated hedgehog path on a Bovis development in Colney Reach, Norwich, has proved a hit with environmentalists, residents and, not surprisingly, hedgehogs. Buyers are guaranteed a permanent procession of the creatures as they negotiate a network of tracks and holes in fences to avoid having to run the gauntlet of local roads. “This is absolutely fantastic,” said the chief executive of the British Hedgehog Preservation Society. “ The path is part of a biodiversity package offered by Bovis, which is also treating local bird life as clients. Buyers choosing their homes can also select one of five styles of bird box depending on whether they wish to attract sparrows, blue tits, house martins, robins or wrens. Marketing manager Gareth Goodridge, said: “We take this sort of thing seriously. It’s a pleasure when development can enhance and preserve the natural surroundings.” (Guardian)
TV makeover shows cause planning chaos
The surge in DIY projects prompted by TV home makeover programmes is threatening to bring the planning system to its knees. So many appeals have been lodged that many authorities have a year-long backlog of cases. One unnamed district council officer, said: “The situation is self-evidently out of control.”
HBF note: The cost of moving is also largely to blame. With stamp duty and agency fees now so high, many more homeowners are looking to adapt their homes rather than move, helping clog up the planning system even more than would otherwise be the case.