A weekly news summary covering all aspects of the housebuilding industry. Available to members only.
Economic News
Further signal that rates will remain on hold
Following last week’s Inflation Report, which most market commentators interpreted as signalling that interest rates are likely to remain on hold for some time, the minutes of the Monetary Policy Committee meeting, held on 9/10 November, showed that the nine member Committee was unanimous in deciding to leave rates unchanged.
(www.bankofengland.co.uk)
Political Events
Urban Task Force report
The Urban Task Force, led by Lord Rogers, gave a mixed review of progress made on reviving England’s cities in a report “Towards a Strong Urban Renaissance”. The report highlighted policy successes and failures over the six years since the Task Force was set up. Successes include that; “For the first time in 50 years there has been a measurable change of culture in favour of towns and cities, reflecting a nationwide commitment to the Urban Renaissance”. The Report highlighted a move back to city centres: Manchester has seen the population living in its centre rise from just 90 in 1990 to 25,000 today and the population of central Liverpool has quadrupled over the same period. The increased use of brownfield land and the higher densities at which new homes are built were also highlighted.
However, the report also noted issues that required renewed attention from the government. These include, in Lord Rogers view, the challenge of climate change, that “middle class families are moving out of towns and cities in search of better schools”, that “massive inequalities persist in our cities”, social housing supply is too low, “few well-designed integrated urban projects stand out as international exemplars of sustainable communities”, “design quality is not a central objective for public bodies” and that “whilst focusing on sustainable communities, we have weakened our stance on urban regeneration”.
Notably, one of the Task Force members, Professor Sir Peter Hall of UCL, did not fully support the recommendation to raise the target to 75% of residential development to be on brownfield land. In a footnote he commented: “I believe there is no overriding need to save Greenfield land, of which we have a surplus in South East England; the case on sustainability grounds for further raising minimum densities is nonproven; the requirement to first develop brownfield land in the growth areas would in practice lead to inflexibility which would almost certainly slow their development; present policies are already inhibiting new housing completions and causing an unprecedented increase in apartment construction, unsuitable for families with children and undesired by potential residents. I am therefore concerned that the proposals on brownfield and densities, however well-intentioned, would – if implemented – deepen the well-documented housing crisis that faces us and our government.
(www.urbantaskforce.org)
Skills Academy team announced
Deputy Prime Minister John Prescott announced the eight members who will work alongside Chair Professor Peter Roberts and Chief Executive Dr Gill Taylor on the board of the Academy for Sustainable communities.
The eight are: Anne McNamara, Co-Founder and Director of FSquared, a Manchester-based regeneration consultancy, George Martin, Director of Sustainability at the Building Research Establishment since 2004, Irene Lucas, Chief Executive of South Tyneside Metropolitan Borough Council since 2002, Juliet Williams, Chairman of the South West of England Regional Development Agency since 2002, Kevin Murray, who runs his own consultancy practice specialising in planning, Paul Spooner, a Regional Director of English Partnerships since 2004, Peter Hetherington, recently retired as Regional Affairs Editor of the Guardian, and Deborah Lamb, Director of Policy and Communications at English Heritage since 2002 and a member of its Executive Board.
(www.odpm.gov.uk)
HBF News
HBF to give evidence to ODPM Select Committee
The Office of the Deputy Prime Minister’s Housing, Planning, local Government and the Regions Select Committee will hear evidence from the HBF, amongst others, as part of its inquiry into the Affordability and the Supply of Housing on Monday 28 November.
Company News
Persimmon and Westbury agree on offer
The boards of Persimmon and Westbury announced that they had agreed on the terms of a recommended cash offer by Persimmon for the entire share capital of Westbury. The offer values Wesbury’s shares at 560 pence each, and the total value of the offer is approximately £643m.
The Westbury board intend to unanimously recommend that shareholders accept the offer. Persimmon believes that the acquisition will provide benefits through: “a balanced regional spread; additional consented land together with further strategic assets and; significant synergy benefits for the enlarged group.”
Duncan Davidson, Chairman of Persimmon, said: "We are delighted to announce this agreed offer for Westbury today. Westbury is an attractive business that will benefit from Persimmon's proven track record for integrating acquisitions and operational excellence. The acquisition will consolidate Persimmon's position as the leading UK housebuilder and we look forward to welcoming the customers and employees of Westbury to the Persimmon Group."
Geoffrey Maddrell, Chairman of Westbury, said: "With its progressive strategy, strong land bank and innovative product range, Westbury has maintained a reputation over the past ten years as one of the leading UK housebuilders. We have excellent management and an especially positive and supportive employee complement, who have delivered significant value for shareholders over many years. Notwithstanding this achievement, Persimmon's proposal offers our shareholders definitive value, at a substantial premium to net asset value, which the Westbury Board believes is in the best interests of shareholders to accept."
For the year ended 31 December 2004 Persimmon reported 12,360 home completions, and Westbury reported 4,361 completions for the year ended 28 February 2005.
(www.westbury.plc.uk)
Crest Nicholson describes the market as stable, but customers remain cautious
In a trading statement made ahead of full-year results (to be announced on 25 January 2006), Crest Nicholson reported that trading in 2005 had been in line with expectations and open market housing completions had risen by around 3% compared to the previous year.
Chief Executive Stephen Stone commented on the market outlook: “The housing market continues to be stable but customers remain cautious. In 2006, we expect open market housing market conditions to be similar to 2005 and we expect our affordable homes business to grow to around 900 units. The fundamentals of the housing market remain good with low unemployment and a continuing shortage of housing supply in our main areas of operation in Southern England and the Midlands.”
(miranda.hemscott.com)
Housing Market
Official figures show modest rise in house price inflation…
The ODPM reported that house prices rose by an unadjusted 0.3% in September as the annual rate of house price inflation edged up from 2.8% in August to 3.3%. The price of homes bought by first-time buyers (FTB) continued to rise faster than the overall market, up 5.0% in September compared to the previous year, although this represented a decline from 5.6% in August.
Regionally, the ODPM reports that prices have risen fastest in the northern regions over the last year, although the rate of annual price growth has slowed quite sharply in these regions in recent months. While the southern regions have seen much lower price growth this year, London, the South East and East saw a pick up in annual price growth in September.
(www.odpm.gov.uk)
… as does Rightmove
Rightmove reported a 0.8% rise in asking prices from 9 October to 12 November, leaving prices 4.0% higher than a year ago, a jump in the annual rate from 1.5% in the previous month. Rightmove’s Commercial Director Miles Shipside gave an upbeat view of the market: “The property market’s key foundation has returned: confidence is back leaving pessimists out in the cold! The combination of sustainable prices and a fall in interest rates has raised buyers’ and sellers’ confidence to strike a deal.”
(www.rightmove.co.uk)
Other News
13% of land in England is Green Belt
The area designated as Green Belt land in England increased by a net 6,800 hectares in 2004 to 1,678,200 hectares, approximately 13% of the country’s land area, according to data released by the Office of the Deputy Prime Minister (ODPM). London and the South East account for 35.8% of the country’s designated Green Belt.
(www.odpm.gov.uk)
Modern methods of Construction Report
The National Audit Office published its report into how Modern Methods of Construction (MMC) can be used to build good quality homes more quickly and efficiently. The key conclusions were: it should be possible to build up to four times as many homes with the same on-site labour; on-site construction time can be reduced by over a half; building performance can be at least as good; cost ranges are comparable depending on specific project circumstances, although they are higher on average; risks increase at early stages of the development process so good risk management becomes more important; tight liaison with planning authorities is vital; and benefits will be wasted if projects are not properly planned.
(www.nao.org.uk)
More affordable houses needed, says commons committee
A commons public accounts committee (PAC) has said that a shortage of affordable housing is disrupting school and family life for tens of thousands of people. The report praised the government’s success in cutting the number of rough sleepers and moving people out of B&B accommodation.
But Adam Sampson, the director of homelessness charity Shelter, said: "The public accounts committee is absolutely right to identify the dramatic fall in the number of new social homes being built as being at the root of the record levels of homelessness. Bad housing is ruining the health, education and life chances of a million children. The public accounts committee report shows why it is so important for the chancellor to commit to Shelter's call for the delivery of 20,000 extra social rented homes each year." (The Guardian)
Paul Samter
Senior Analyst - Economic and Policy Affairs
Home Builders Federation
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