A weekly news summary covering all aspects of the housebuilding industry. Available to members only.
Election Result
At the time this summary was written the results of the general election indicated that Labour would remain in power with a reduced majority of around 66. There had been no announcement on any changes to the Cabinet.
HBF comment: Most commentators have concluded that the Government's reduced majority will strengthen Gordon Brown's influence and potentially advance the date at which the Prime Minister may step down.
On this basis, a key consideration for industry interests will be whether there are any significant changes in the sharing out of Ministerial portfolios and the extent to which those closely associated with the Chancellor are placed in roles relevant to current housing policy issues. Junior Ministerial posts will not be known until after today and HBF will report fully on the new Whitehall landscape next week. Meanwhile it should be noted that a number of former key aides to the Chancellor have now been elected as MPs.
Election Round Up
Chancellor emphasises Labour’s desire to extend home ownership
Speaking in Gloucester during the campaign, Chancellor Gordon Brown, re-iterated Labour’s policies to increase home ownership. He commented “I have been struck by how much support there is for taking new measures that will help young couples get the best start in their lives together. So today I want to promise new measures in the next parliament to help more and more British families own their own homes.”
Mr Brown set out the proposals: “Through shared equity, this scheme will give people the chance to buy as large a share of their home as they can afford - with the rest being held by the council, housing association, or a private lender. As part of this approach, for houses bought on the open market, we are forging a new partnership with the council of mortgage lenders to offer equity loans - jointly provided by the government and a private lender. I propose we enter talks with the building industry as well as mortgage lenders and the banks to examine whether our shared equity offer can apply to newly built homes as well as existing homes.” (http://www.labour.org.uk)
YouGov poll shows business leaders backed Conservatives
A YouGov poll of 475 firms shows that 65% of respondents believed Conservative policies “would secure the best future for UK businesses”. (http://www.conservatives.com)
Deputy PM determined to keep power base
Deputy Prime Minister John Prescott made clear his desire to hold on to a significant ministerial portfolio. In an interview with the Guardian he said he had “learned the lesson that you need a departmental base” as a necessary step to retaining influence. (Guardian)
Company News
Heron steps back from bid for Crest Nicholson
Heron Group’s acrimonious bid for Crest Nicholson appears to have broken down after Heron dropped its approach. Heron claimed it had been “unable to obtain any positive reply from the board of Crest Nicholson” when it requested information to value the business. Heron said it reserved the right to come back to the group within six months if there was another bid for Crest. (FT)
Housing Market News
Halifax report no change in prices in April
Halifax reported that house prices were unchanged from March in April (on a seasonally adjusted basis), causing the annual rate of house price inflation to drop to 7.8% from 9.7% in March. Chief Economist Martin Ellis commented: “The latest indicators provide further evidence that activity levels are stabilising following a sharp downturn in the second half of last year. As a result, we appear to be entering a period of broad stability, particularly in terms of market activity.” (http://www.hbosplc.com)
First time buyers getting older
Government figures have added to the evidence that first time buyers are finding it harder to get on the housing ladder. Part 1 of the Survey of English Housing 2003-4, Trends in Tenure and Cross Tenure Topics, revealed that the proportion of households between the ages of 16 - 24 who are buying with a mortgage has fallen from 34% in 1991 to 18% in 2004.
The survey has also shown that almost two thirds of English households consist of two or less people with 35% of households consisting of couples with no dependent children and 29% of one person. Owner occupation had risen to 71% in 2004 while the housing association share of the social sector had risen from 17% in 1994 to 37% in 2004. (http://www.odpm.gov.uk)
Savills predict a slowdown in second home ownership
Estate agent Savills predict that the second home market in England is expected to slow sharply over the next few years. Richard Donnell pointed out that: “This is partly because of the growing property offers overseas. You can get something for £100,000 abroad but in this country you are looking at £200,000 plus as a starting figure.” Mr Donnell further commented “Any growth that is seen will be most evident in the major city centres where buyers are increasingly looking to purchase pieds-a-terre as a week-day base, commuting back to their larger home in the country at weekends.” (FT)
Other News
Estates Gazette report key messages of HBF Barker Conference
The Estates Gazette reported on HBF’s Barker Review conference, making specific note of the findings of research by Professor Dave King, which suggest that the present planning regime is producing too many flats and not enough larger dwellings. Professor Christine Whitehead, from the London School of Economics, is quoted as saying: “The mix of current housing provision is a matter of concern. Requirements for higher planning densities means that we are building smaller units. However, demand is mostly for larger homes. The whole system is stopping those being built.” (Estates Gazette)
RTPI warns of planner recruitment crisis…
The Royal Town Planning Institute (RTPI) has warned that council planning departments are facing a recruitment crisis. RTPI research has shown that 13% of planning posts in London are vacant and 17% of posts are currently filled by expensive agency staff. It also found that the proportion of RTPI members working in the private sector had risen from 18% in 1997 to 24% in 2001, renewing fears that private house builders are taking the best staff.
RTPI’s policy development officer Chris Scrafton said: “Local authority planning has been severely under resourced for decades, which has lead to many of the problems we now have including a lack of skilled and motivated planners.” (Guardian)
…as planner poaching slows down builders
Builders that take on staff from councils may be contributing to planning delays. House builders who lure trained planning officers with better salaries are finding their schemes delayed because they are employing the staff who would once have undertaken the task. This comes at a time of increased applications as builders look to meet John Prescott’s housing aims.
Some borough councils, such as Surrey Heath in Camberley, have announced a temporary reduction in services because the problem is so acute. (Telegraph)
Brownfield action plan in East of England completed
Entec announced that it has completed work on the brownfield land action plan, which includes identifying actions needed for redevelopment on 150 brownfield sites, for the East of England Development Agency. (Brownfield briefing)
Affordable homes plan for Scotland
Scotland’s housing agency has launched a three-year plan to build 21,500 affordable homes. The scheme, Communities Scotland, promises to invest £1.2 billion until 2008 to build the homes for social rent and low-cost home ownership. The houses will be a mix of new build and refurbished housing stock. This is an increase on the £750 million invested in 16,500 affordable units over the previous three years.
The Chartered Institute of Housing (CIH) in Scotland said it was concerned that the targets failed to take into account the likely increase in demand when key homelessness legislation comes into force in 2012. A spokesman said: "Quite a lot of households claiming housing at the moment are turned down, but the act will remove the barriers to claiming, so every household will be able to claim. Looking forward to 2012, it's clear that we've got to start building now because it takes a while for new housing to come on stream." (Guardian)
Paul Samter
Senior Analyst - Economic and Policy Affairs
Home Builders Federation