A weekly news summary by Pierre Williams, HBF head of media, covering all aspects of the housebuilding industry from . Available to members only.
Hometrack and Nationwide Record Price Falls
Hometrack has recorded its biggest monthly fall in prices since the shudder caused by September 11. It said that average prices fell 0.6% in October - the fourth successive monthly fall. No counties recorded price increases, prompting Hometrack to predict that prices will not rise at all in 2005.
A spokesman said: “House prices are likely to drop further over the next few months due to the current excess supply and the expected seasonal fall off in the number of prospective buyers. However there is no sudden or significant prospective downturn in sight.” The survey also showed the number of properties on the market increased by 5.6%, while buyers fell by 3.8%. Average prices achieved fell to 93.7% of asking price, down from 94.5% in September. The Nationwide also recorded a price fall in October of 0.4% - it’s biggest decline since February 2001. It too rejected any possibility of a crash. (Times, Independent, Express)
New Mortgage Lending Tumbles as Repossessions Rise
The BBA reported a 30% fall in the number of mortgage approvals in September compared to the previous month. Meanwhile, repossessions in the third quarter were up 15% over the year - the highest since the beginning of 2000. The figures prompted a fresh wave of comment from analysts suggesting the market is cooling faster than expected. The Bank of England’s Monetary Policy Committee also appears to have expressed surprise in its minutes of its October meeting at the speed at which house prices have come off the boil. But there is still no certainty that the trend will continue. The last time the market showed such clear signs of cooling was in early 2003 in the run-up to the Iraq war. However, it confounded predictions that time rebounding with vigour in early 2004. (All media)
Rates Have Peaked Say Economists
A sharp downturn in the economy prompted predictions that interest rates may have peaked. Economists say rates will be pegged again in November after official statistics show GDP growth falling to 0.4% in June to September, compared with growth of 0.9% in the previous quarter. There is some expectation that rates could rise once more during the beginning of 2005 before being cut later in the year.
But a survey showing business confidence is at its lowest for a year has prompted the CBI to urge the Bank of England once again not to raise interest rates. Ian McCafferty, CBI chief economist said: “We urge the Bank to keep rates on hold for the foreseeable future.” (All media)
Westbury Allays Market Fears
Announcing a 22% jump in profits, Westbury dismissed fears of a house-price collapse and is gearing up for a big increase in volumes - as long as government sorts out the planning system. The plans are to push volumes up from 4,600 this year to 7,000 pa in five years time. Although Westbury has warned of tougher market conditions and lowered sales volume estimates for this year down from 4,750 to 4,600, its confidence has reassured the City of prospects for the whole industry. Westbury rose 14p to 383p; George Wimpey was up 12p to 355p; Barratt up 14p to 513.5p and Redrow up 10p to 342p. Aiming to compensate for flat market conditions over the next few years with increased volumes, Westbury CEO Martin Donohue urged the government to put the Barker Review recommendations into practice. He said: “About 10 years ago it took us 12 months from buying a plot to the first families moving in. Now delays in planning mean it takes 18 months to two years.” (FT, Telegraph, Express)
Tories Launch “Right to Own” Policy
The Conservatives have launched a new four-point “Right-to-Own” initiative aimed at extending the existing Right-to-Buy scheme. First, the policy would extend right-to-buy to one million housing association tenants. Second, it would allow those living in social housing to buy homes of their choice - not just the ones they live in - by giving them transferable discounts that could be used towards the cost of any home on the market. Third, it would allow tenants to steadily build-up a stake in their home through a “Right to Shared Ownership”. Finally, they would extend shared equity schemes. Shadow Housing Minister John Hayes, said: “Conservatives want the dream of home ownership to come true. This action plan will bring the housing ladder back within people’s grasp and within the reach of people who currently have no choice.” But in launching the scheme, Michael Howard claimed that immigration had put serious pressure on housing stock. This allowed a clearly worried National Housing Federation to claim the Tories were “close to playing the race card” with their new scheme. (Guardian)
Milton Keynes Growth Attacked by Anti-lobby
The CPRE has launched another attack on housing plans in Milton Keynes and other south Midland towns, saying the plans would “trash the countryside” and create estates of homes too expensive for moderate earners. It said: “We think (the plans) are extraordinary considering that one of the key aims was to provide more affordable housing.” It also said the plans appeared to undermine the sequential test to brownfield use. Responding, Lord Rooker said the decisions were those of the local councils or urban regeneration companies and that he would back their decisions - provided they abided by the rules of the sustainable communities plan. (FT)
Self-Build Rockets
New figures show self-build has increased from 2,000 in 1978 to 20,000 in 2004. In all, self-builders delivered 25% of the detached homes built this year. Of course this increase is largely explained by the difficulty of getting planning for large schemes and the consequently increased search for in-fill plots. But a study by the JRF says many self-builders are greatly motivated by the desire create more individually-styled homes. (Times)
A Million Children in Overcrowded Homes
About a million children live in overcrowded homes because of a lack of social housing the charity Shelter, claimed this week. And it warned that number is set to grow - increasing health and social problems among those affected. The charity said the current annual build rate of less than 5,000 family-sized social homes was well below requirements and called for more government action in this area. (Guardian)
New Mortgage Rules Imminent
The way mortgages are bought and sold will come under the remit of the Financial Services Authority from the end of this month. It will be a criminal offence to sell or advise on a regulated mortgage without being authorised by the FSA to do so. (All media)
HBF Note: All sales and marketing staff of housebuilding firms should now be fully aware of the limitations placed upon them when obtaining information from clients for referral to mortgage brokers.