A weekly news summary covering all aspects of the housebuilding industry. Available to members only.
Economic News
High street retailers continue to suffer
The volume of retail sales continue to run at below last year’s levels according to the Confederation of British Industry’s (CBI) October Distributive Trades Survey (DTS). There was a modest improvement in the balance of retailers reporting that their sales were lower than a year ago from –24% in September to –18% in October, but it was the fifth successive month where sales were significantly lower than last year.
Chairman of the DTS panel John Longworth commented: “October was yet another tough month for retailers who have seen no let up since June. The effect of five months’ very weak sales is now also having an impact on wholesalers and on the wider economy. People are clearly holding back from spending on big ticket items such as cars, and the downturn in housing means fewer people are buying household goods or doing DIY. Retailers will be hoping there is light at the end of the tunnel and will be doing all they can to entice shoppers onto the high street, as Christmas approaches.”
(www.cbi.org.uk)
Political Events
Home Information Pack draft regulation published
The government published draft regulation on Home Information Packs. The pack contents are to include a description of the property for sale, forms for the seller to provide more information about fixtures and fittings, evidence of title, replies to standard searches, warranties and guarantees for building work and a Home Condition Report including how energy efficient the property is, as well as extra information for leaseholders.
Housing Minister Yvette Cooper said: “Buying a home is stressful enough without losing hundreds of pounds on legal fees or valuations for properties that then fall through. It is crazy that over £1m a day is wasted like this. Home Information Packs will actually save money and cut waste in buying and selling homes, that’s why consumer groups have been campaigning for this for so long."
(www.odpm.gov.uk)
HBF Comment: HBF will be consulting members about the proposed detailed contents of HIPs before making an official response to the government. NB: A Home Condition Report is not required for the initial sale of new homes provided they have a suitable warranty.
Opposition claims HIPs will "exploit buyers and sellers"
Opposition politicians and industry groups have warned that Home Information Packs (HIPs) will create an army of unregulated pack providers who could exploit buyers and sellers.
Sarah Teather, the local government spokesman for the Liberal Democrats, said: “Most buyers will simply not trust the report of a home inspector paid by the seller and will end up paying for their own survey.” Caroline Spelman the shadow secretary of state for local government said HIPs would not prevent gazumping or speed up the buying of a home. “Labour’s sellers’ packs will simply put up the cost of selling a home, create more red tape and ultimately undermine a fragile housing market.”
Company News
First successful bidders for £60,000 house challenge announced
Deputy Prime Minister John Prescott announced the first successful bidders selected by regeneration agency English Partnerships to build their “Design for Manufacture” homes on four of ten publicly-owned competition sites. The successful bidders were Barratt Developments plc, George Wimpey UK and the SIXTYK Consortium (Crest Nicholson and Kingspan Offsite).
Mr Prescott commented: “We set the bar very high to ensure the winning bids are of the highest calibre in terms of design, cost efficiency and environmental standards. All the finalists have responded well to a very tough challenge, proving it is possible to design affordable, quality homes for £60,000. I am impressed with the way they have all refined and improved their plans during the final stage of the competition and I congratulate the successful bidders who can now bring their designs to life.”
(www.odpm.gov.uk)
Profits fall at McCarthy & Stone
Retirement home builder McCarthy & Stone reported a fall in profits when they announced preliminary results for the twelve months to 31 August. Pre-tax profits fell 14% compared to the preceding year to £127.4m, on turnover of £325.6m. The group achieved 1,983 unit sales, 3.5% fewer than the previous year, while return on capital was 30%. Year end stock units (which includes all stock, from finished units to conditional land without planning permission) were increased by 2% to 10,662 units.
Chairman Keith Lovelock commented: “Clearly the housing market is not showing any significant signs of improvement at present. We have substantially increased the number of active sales sites in order to maximise our sales opportunities in a harder market but, even so, at this stage, we don't expect volumes for the year as a whole to exceed last year's, while margins are likely to ease further. So, we anticipate another testing year ahead of us but nevertheless, the long term attractions of our niche position in a growing specialist market remain strong.”
(miranda.hemscott.com)
Housing Market
Nationwide report that house prices rose in October…
The Nationwide building society reported that house prices rose by a seasonally adjusted 1.3% in October, following falls of 0.2% in each of the preceding two months. The annual rate of price growth rose from 1.8% in September to 3.3% in October. Nationwide cited the August cut in interest rates as the key factor boosting prices and activity.
However Nationwide’s Group Economist Fionnuala Earley does not expect prices to start to rising sharply: “We think that it is far too early to say that the market has reached a turning point and that prices will continue to accelerate from here.” Four factors are cited as supporting this view: Affordability remains stretched, October’s rise was likely to have reflected a response to August’s interest rate cut, the macro economic environment (which is described as more promising than it was but still uncertain) and consumer expectations for house price movements are more modest than they were at the start of the year.
(www.nationwide.co.uk)
… while Halifax report no change
Halifax reported that house prices were unchanged, on a seasonally adjusted basis, in October, although this follows on from a cumulative rise of 3% over the two preceding months. The Halifax house price index shows that prices are currently 3.9% higher than a year ago, on a three-month average basis, a measure that has edged up from 2.3% in July.
Chief Economist Martin Ellis is fairly positive on the state of the market but does not anticipate a return to high levels of price growth: “The overall pattern of price movements over the past few months shows that the market has strengthened compared with earlier in the year, but the static level of prices in October suggests that we are not poised for another sustained period of sharply rising property values.”
(www.hbosplc.com)
… as mortgage approvals continued to recover in September
The number of mortgage approvals continued to recover in September, with a seasonally adjusted 107,000 loans approved for house purchase, a modest rise of 1,000 from August and the highest level seen since June 2004, according to data released by the Bank of England. Approvals were up 23% in comparison to the same month a year ago, a measure that has improved sharply from a low of being down 42% on an annual comparison in October 2004.
(www.bankofengland.co.uk)
Other News
Barker joins Housing Corporation board
Kate Barker is to join the board of the Housing Corporation. Commenting on her new appointment she said: "This gives me the opportunity to think through the role of affordable housing in helping the supply problem. A lot of my final report turned out to be about market housing, this gives me an opportunity to look at an area that was not fully explored."
In an interim report published in 2003, Ms Barker found that housing associations were failing to borrow against 130,000 homes, because so much stock in the sector was owned by small landlords. She said: "I'm interested in following up those thoughts. Efficiency is always important, but I'm not starting off with some great assumption that there are huge efficiencies to be made from housing associations. It's a mistake to go on to a board with preconceived ideas."
Ms Barker has also defended recommendations she had made in her 2004 report into housing supply against claims they will damage the environment. "I thought the ODPM went to enormous lengths to ensure that the changes did not have ill effects on the environment. Some of the concern about the changes to the planning system, I find genuinely puzzling. But this one will run and run," she said. (The Guardian, www.housingcorp.gov.uk)
Paul Samter
Senior Analyst - Economic and Policy Affairs
Home Builders Federation
For daily news updates for the housebuilding industry from Housebuilder magazine go to www.house-builder.co.uk