A weekly news summary covering all aspects of the housebuilding industry. Available to members only.
Economic News
CBI reports a further fall in retail sales
The Confederation of British Industry (CBI) reported that the volume of retail sales for the year to May fell for the third successive month, with a balance of –7% of those surveyed reporting that sales fell over the month. The three-month moving average balance hit its weakest level since August 1992. Chairman of the CBI’s Distributive Trades Survey Panel, John Longworth, commented: “Broadly speaking, the categories of goods most closely correlated with housing transactions have fared worse than the average over the past year.” (http://www.cbi.org.uk)
Mortgage approvals continued a gradual recovery in April
Data from the Bank of England revealed that the number of mortgage approvals continued to recover in April. After dropping by more than 35% on a year on year comparison as the housing market cooled markedly over the second half of 2004, 95,000 loans (seasonally adjusted) were approved for house purchase in April, a marginal rise from 92,000 in March and considerably above the recent low of 77,000 in November 2004. It was the fourth consecutive monthly increase, although approvals were still 16% lower than in April 2004 on an unadjusted basis. (http://www.bankofengland.co.uk)
Manufacturing output deteriorates further
The Chartered Institute of Manufacturing and Supply (CIPS) reported than manufacturing output fell at the sharpest rate for two years in May. The CIPS Manufacturing Index declined from 49.1 in April to 47.3 in May. A reading below 50 represents a fall in output in the sector.
Housing Market News
Nationwide reports further evidence of a soft landing of house prices
Nationwide reported that house prices rose by a seasonally adjusted 0.3% in May to stand 5.5% higher than a year ago, the lowest annual increase since August 1996. Price growth has averaged 0.2% over each of the last three months and Group Economist Fionnuala Earley commented: “This continues the trend witnessed since the start of the year and is consistent with Nationwide’s view that the market is cooling gradually.”
Scottish house prices fall by 2% in the first quarter
House prices in Scotland dropped by more than 2% over the first three months of 2005, according to official figures issued by Registers of Scotland, the executive body responsible for land and property records. The price of an average home in the quarter of the year was £115,283, down 2.4% on the previous quarter's £118,123. Despite the fall, the figure still represents an increase of 7.8% on the same quarter last year. (http://news.scotsman.com)
Other News
NSI reports that first-time buyers are finding it harder to get on the property ladder
Research by government-backed agency, National Savings and Investments (NSI), found that first-time buyers are being forced to save harder and for longer to get on the housing ladder, despite the cooling market. Typical first-time buyers saving 5% of their earnings must save for 4.75 years to put away a standard minimum 5% deposit on a first home. This has risen from 4 years of saving just a year ago. First-time buyers in East Anglia have the hardest time in saving, needing an average of five years to save up the minimum deposit. (http://www.nationalsavings.co.uk)
Academics call for demolition of 3.2 million homes
A report by researchers at Oxford University’s Environmental Change Institute and Heriot Watt University found that 3.2 million homes need to be demolished over the next 45 years if the government is to fulfil its aspirations for tackling global warming. The report notes that Britain’s 25 million homes are among the oldest and least efficient in Europe and recommend that 14% of the current stock should be pulled down by 2050. Although listed buildings would be spared under the proposals, it would involve a four-fold increase in the present demolition rate to 80,000 per year. (Daily Telegraph)
Former housing minister attacks Prince of Wales’ campaign to preserve traditional architecture as “old fashioned”
Former housing minister Nick Raynsford attacked the Prince of Wales’ campaign to preserve traditional architecture saying: “We live in a different society today. We need to have opportunities for people to buy homes, to rent homes, and we need regeneration in the cities.” Mr Raynsford also criticised the house building industry saying: “When you think of other industries which have been pushing forward with technology, our housing industry has been very hidebound and tended to stick to the past.” (Times)
Housing Corporation questions government plans
Private housebuilders are likely to gain access to all the £3.3 billion of public money available to build affordable housing according to a document leaked to The Guardian newspaper. They will compete alongside not-for-profit and charitable housing associations who until now have had exclusive access to such grants. A report to the Housing Corporation’s board said that it was “likely” that a £200 million pilot project giving private housebuilders funds to build affordable homes would be “opened up to non-RSLs before a full review of the pilot project is completed.”
The document questions the government’s drive to increase the number of homeowners by 1 million by 2010 and the Housing Corporations ability to deliver this. The paper, in note form, said it is “likely” that “final government proposals on low cost home ownership do not enable Housing Corporation to deliver credible product portfolio and meet stakeholder expectations.”
The leaked paper to the corporation's board also concedes that there is a "possibility" the agency will fail to successfully handle awarding grants to developers "due to [the] innovative and complex nature of [the] project". Housing associations are likely to be furious at the plan. They claim that public money for affordable housing should not be available to line the pockets of private developers. The corporation's paper said the issue threatens its relationship with the National Housing Federation, the trade body for housing association, which has vigorously opposed the plan. The document, written in notes to table, said: "NHF relationship particularly vulnerable around grant for non-RSLs." (Guardian)
Paul Samter
Senior Analyst - Economic and Policy Affairs
Home Builders Federation
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