A weekly news summary covering all aspects of the housebuilding industry. Available to members only.
Economic News
Interest rates
The minutes of the Bank of England’s Monetary Policy (MPC) meeting on 9/10 March revealed that two members (Andrew Large and Paul Tucker) voted for a 25 basis point increase in the repo rate, while the remaining seven members voted for no change. This follows on from a 8:1 vote in February, which broke the longest stretch of unanimity since the MPC’s inception in 1997. (http://www.bankofengland.co.uk/mpc/mpc0503.pdf)
Conservative Economic Policy
The Conservative Party announced a five-point action plan on 22 March designed to lock in economic stability for the long term.
Launching the Economy chapter of the Conservative Party Manifesto, Michael Howard stressed that the Conservatives were committed to the long-term independence of the Bank of England – outside the euro.
The Conservatives action plan would:
Ensure that the Bank of England retains its independence and control over interest rates to lock in economic stability for the long term.
Ensure national statistics are free from any suggestion of government interference by giving independence to the National Statistics Office and creating a new Fiscal Projections Committee.
Implement a Value for Money Action Plan – to control government spending and save £12 billion by 2007-8.
Use £8 billion of these savings to reduce government borrowing.Use a further £4 billion to cut taxes in a first Budget.
Level of property transactions
The Inland Revenue reported that there were 125,000 (seasonally adjusted) property transactions in February. For the two months data available for 2005, transactions were 20.0% lower than for the first two months of 2004. (http://www.inlandrevenue.gov.uk/stats/survey_of_prop/pdinternet.pdf)
Inflation
The Consumer Prices Index (CPI) showed no change in the annual rate of inflation in February. The CPI, which is that Bank of England’s target measure, showed prices 1.6% higher than a year ago, an unchanged rate from January.
The Retail Prices Index (RPI) and RPIX (the former target measure) were also unchanged at 3.2% and 2.1% respectively. (http://www.statistics.gov.uk/pdfdir/cpi0305.pdf)
Other news
Steel frame industry comes together to drive MMC
The steel frame industry is set to take advantage of the current push towards modern methods of construction (MMC) by forming its own group. The Steel Homes Group (SHG) will represent big hitters such as Corus, UNITE Modular Solutions and Fusion Building Systems. SHG will promote the benefits of steel frame to residential housebuilders and will highlight how it complies with government's sustainable communities programme.
Director of Fusion building Systems Ltd Michael Martin said: "There's an increased recognition at all level of government that Britain's housing crisis can only be resolved through modern methods of construction and the use of innovative materials."
Government committed to PFI
The government will continue to renovate sink estates using the private finance initiative despite its faltering progress to date. Leeds recently signed a PFI deal to improve its Swarcliffe area six years after it had been earmarked for government help.
Leeds is only the fourth council to reach this stage. But the housing minister, Keith Hill, said: “This excellent news clearly shows that housing PFI schemes can be delivered according to guidance. The people of Swarcliffe can now look forward to the sustainable delivery of decent homes during the next 30 years.” He added that the deal “clearly demonstrates the government’s ongoing commitment to housing PFI and the increasing importance of its role in making homes decent.”
Tory housing policy under fire
The Conservative party’s latest housing strategy proposals (see last week’s summary) has come under fire from housing charities. The party plans to scrap regional housing targets and give local authorities greater discretion over the number and quality of homes built in their areas. The homelessness charity Shelter described the strategy as “playing into the hands of the ‘not in my back yard lobby’.” The housing minister Keith Hill claimed the Conservatives would cut housing funding by £1 billion. “Cuts on this scale would have a devastating effect; it would mean fewer homes, less affordable housing and increased homelessness,” he said.
Sellers look to capitalise on Easter optimism
Figures from property website Rightmove indicate sellers are looking to take advantage of the traditional increase in buying over Easter. House prices rose by an average of £1,132 last month, or 0.6%, as sellers anticipated a buying spree over the bank holiday weekend.
But Rightmove warned that sellers were misguided if they thought buyers were ready to pay higher prices. A spokesman for the website said: “It’s counter-intuitive that sellers are looking to push up prices when there is already a huge oversupply of homes for sale.” Rightmove said the number of properties coming on the market was almost twice the number being sold or withdrawn.
PPS6
The new PPS6 on the planning of town centres was published this week. Minister Keith Hill said the aim of the policy is that planning bodies must be more proactive in planning the development of their towns. They should ensure city centres are the “focus for development, to provide a range of services in a good environment, accessible to all.” This in turn was “of critical importance to our vision of sustainable communities.”
Planning Delivery Grant and Planning Fees
The Government also announced the latest £170 million tranche of Planning Delivery Grant for local authorities for 2005-06 – the largest annual funding so far for this scheme. Along with theis Keith Hill announced planning fee increases that could raise an additional £68 million for local authorities in 2005-06.
Affordable housing and Section 106
The Joseph Roundtree Foundation published new research showing that an increasing proportion of affordable housing is now being delivered via Section 106 agreements. From just under a third of the total in 1999 it increased to almost half the total in 2003. Nevertheless, over 75% of all affordable completions require some Social Housing Grant.
Guardian and FT articles this week
Rob Ashmead has responded vigorously to the two, separate but both ill-thought through articles in the Guardian and FT. See letters pages.
Crest fights off Heron
Housebuilder Crest Nicholson has rebuffed a takeover bid from the privately owned Heron Corporation run by Gerald Ronson. Crest said Heron’s offer of 345p to 430p a share, which could value the housebuilder at up to £480 million, significantly undervalued the company. Crest have also refused to allow Heron access to its books saying it will only do this if it receives an offer it feels it can recommend to shareholders.
Crest chairman John Matthews said: “For any offer for Crest Nicholson to be recommended by the board, it will need to fully reflect Crest’s strengths and excellent prospects. Even at the top of this range, this proposal significantly undervalues Crest Nicholson and shareholders are recommended to take no action.” Heron now owns a 23% stake in Crest Nicholson. It is thought its interest in the company stems from Crest’s extensive land bank. (Independent, FT)