A weekly news summary covering all aspects of the housebuilding industry from Pierre Williams, HBF's head of media, available to members only.
Government’s Housebuilding Plans Will “Devastate” Environment
The government’s plans to build more than a million new homes in England will have devastating environmental consequences according to an unpublished report from the Department for the Environment, Food and Rural Affairs (Defra). Examining the impact of fulfilling the recommendations in the Barker review of housing supply, Defra researchers concluded this would result in a loss of greenfield equivalent to half the size of Greater London and ruin the Government’s plans to tackle climate change by increasing carbon emissions from housing by one-fifth. It priced the total environmental damage to Britain by 2016 at between £5bn and £8.4bn. The report said the only way of reducing the impact was to build at higher densities and use the most environmentally sustainable construction methods. (Telegraph)
Skills Shortages Hit Homes Target
The government’s housebuilding plans are also being jeopardised by a chronic shortage of skilled labour. The CITB says construction needs 83,000 new skilled labourers a year to make up a shortfall that has prompted the mass immigration of contractors from eastern Europe. Meanwhile housebuilders have responded more vigorously to off-site manufacturing with Westbury’s Space 4 leading the way and Barratt’s David Pretty saying much more investment will be forthcoming if the planning system allows increased volumes and economies of scale in OSM. (Telegraph)
Market “Stagnation” Likelier Than a Crash
Whilst the continuing rise of the housing market has prompted ever more shrill warnings of a forthcoming crash, the likeliest scenario emerging is that of a long and painful period of stagnation. With the prospects of a sharp rise in interest rates or inflation nowhere to be seen, the prompt of a crash - anything that forces owners to sell - is missing. So now, nearly all market pundits and lenders are forecasting a dramatic reduction in house price rises over the medium term. Whether a long period of stagnation is enough in itself to prompt a crash in due course remains to be seen. But rising prices have fuelled consumer confidence and spending. Stagnation could sap that confidence, which itself could trigger an economic downturn that might bring down house prices in its wake. (FT, Express)
Mortgage Lending Surges Again
According to British Banking Association figures, mortgage lending rose 17.5% to £16.1bn in April, its strongest level since November. However, signs of cooling are emerging despite the rise, with mortgage approvals falling by 15% over the same month. Re-mortgaging has also declined to its lowest level since last summer, suggesting that higher interest rates are staring to bite by reducing the number of attractive deals on offer. (All media)
New Homes Short on Parking
Winchester City Council has banned residents of new homes from parking on the streets. Cambridge, Canterbury and York have also excluded new home owners from applying for residents’ parking permits and other cities are keen to follow suit. At the same time the PPG3 drive for higher densities and John Prescott’s call on planning authorities to “reduce reliance on cars” is exacerbating the problem. A Winchester estate agent said the lack of parking was making new homes more difficult to sell as quickly and said excluding new homes only from parking permits was “social engineering”. (Telegraph)
Bellway’s Brownfield Focus Attracts Investors
Bellway’s focus on brownfield sites has paid off handsomely. Whilst its share price has risen from 200p in 2000 to a 827p high earlier this year, further growth is expected. With record forward order books, a healthy land bank and a huge jump in forecast profits for the year, AAA-rated fund manager Ashton Bradbury has reportedly been adding to his own stake in the company. (Mail on Sunday)
Britons About to Break Through £1 Trillion Debt Level
Britain’s level of personal debt is expected to reach £1 trillion next week. The borrowing milestone is expected to renew accusations against government that it is encouraging a culture of debt. (All media)
Carry on Building….
The housing crisis has triggered a major shift in public opinion with the vast majority of respondents to an HBF-commissioned survey supporting more housebuilding. NIMBYism is falling out of favour with three-quarters having no objection to development in their community, although half would resist new development in their own street. More than half believe their council should encourage more construction. “The poll is extremely revealing about changing attitudes,” said Rob Ashmead for HBF. “The public clearly wants action to ease housing problems even when this means building new homes in their own area.” (Sunday Express)
Average London Prices Break £250,000 Barrier
The average London house price has broken the £250,000 barrier for the first time. It also means buyers of a typical home in the capital now have to pay 3% of the purchase price - an average £7,500 - in Stamp Duty. This has prompted a fresh wave of calls on the Chancellor to provide some help for first-time buyers. The Rics said: “Having to pay Stamp Duty at that level cannot have been intended to hurt the lower end of the market. The time has come for Stamp Duty thresholds to be urgently addressed.” (Standard)
Barratt Welcomes Rate Rise
Barratt CEO David Pretty has welcomed recent interest rate rises for helping deliver stability to the housing market. He said: “Excessive price rises of 15 - 25% are not healthy for anyone. Rate rises will help make the market less volatile. It’s better for buyers and sellers.” Barratt also delivered a reassuring update on trading which is on course for a 12th consecutive year of growth and strong sales across the country. (Express)