A weekly news summary by Pierre Williams, the HBF's head of media, covering all aspects of the housebuilding industry. Available to members only.
Nationwide: The Year of Two Halves
Announcing a further 0.2% drop in average house prices in December, the Nationwide said the latest fall was symptomatic of 2004, when strong growth of the first six months was largely eroded by the rapidly weakening market of the second half.
The building society expects the slowdown to continue but forecasts an average increase of 2% in 2005 - a figure masked by strong regional variation. It says further but moderate falls can be expected throughout most of the souths most affluent areas. The building society has produced a map of what it expects will be housing hot or cold spots during the year. A spokesman said: A sharp downturn in prices cannot be completely ruled out but, while the economic outlook remains positive, it looks unlikely. (All media)
Halifax: Prices Rebound Strongly
Not for the first time, the Halifax disagrees with the Nationwide and says house prices rebounded strongly in December, jumping 1.1% - the first rise it has recorded since September. But the bank has not revised its prediction for a 2% fall in prices this year. Like the Nationwide, Halifax said the market was subject to serious regional variation, with prices rising by between 1.2% and 3% in the North while London and the South East fell by 0.5% and 1.6% respectively. (BBC)
HBF Note: Somewhat ironic that the bank which says prices rose in December thinks they will fall this year, while the building society which told us they fell, thinks they will rise.
Mortgage Approvals Slump to Nine-Year Low
The number of mortgages approved fell to its lowest level for nine years in November - down 43% on a year ago. House sales volumes were also down by the same amount. These two factors have convinced housing economists of further price falls ahead. Bank of England figures show the number of new home loans fell from 85,000 in October to 77,000 in November. During the same month last year, new mortgage approvals reached a peak of 134,000.
More positively, mortgage equity withdrawal is slightly down and weaker than expected retail figures add weight to speculation that interest rates may soon be on a downward trend. The Council of Mortgage Lenders nevertheless remained reasonably upbeat, forecasting a 2% price rise in 2005. Pierre Williams for HBF said history was the best indicator for long-term predictions, And with house prices increasing by an average of more than 10% a year over the past 40 years but annual retail prices rising by just over 6% per annum over the same period, the future of the housing market looked assured. (BBC R4 Today, FT, Times, Guardian, Telegraph)
House Price Crash Main Economic Threat
The biggest threat to the stability of the economy would be a sharp fall in house prices, according to a poll of 21 leading economists. Although they rarely agree on anything, a surprising three-quarters of the economists questioned agreed on this issue. Although this consensus alone is not enough to stop prices crashing, it does suggest that the Bank of England will focus its attention on preventing this when setting interest rates. (Telegraph)
Amended Plan For New 60,000 Low-Cost Homes
The government is proposing a new public-private partnership with mortgage lenders to provide cheap loans for aspiring first time buyers. The idea is for key workers and other low-income workers to buy their own homes by offering them interest-free loans of a quarter of the value of the property. The idea would be combined with John Prescotts earlier idea of building new homes for 60,000 on government-owned land. These latest initiatives appear to be an extension of the Homebuy scheme, which has provided 325m of taxpayers money to assist just over 10,000 key workers to buy homes. Research by the Council of Mortgage Lenders suggests the number new households needing some form of affordable housing has reached 150,000 a year.
HBF Note: The FT comments: the right solution is not to boost demand with subsidies but to boost supply through a far-reaching overhaul of planning law
Construction Industry Will Need State to Unlock Growth
The key to continued growth in construction and housebuilding in particular, lies in government hands, according to the Construction Products Association. The association forecasts that growth in the private housebuilding sector will halve in 2005 to 6% from last years 12%, and will fall again to just 1% in 2006. But although the association is confident that a recession in the industry can be avoided, much depends upon the governments readiness to pursue its investment programmes in public sector construction, notably social housing. (Times, FT)
HBF Attacks Proposed Planning Fee Hike
A substantial hike in planning fees for major developments would be unfair says HBF. The government has launched a consultation exercise on raising fees for major applications on a sliding scale from a maximum 11,000 to 50,000 and from 100 to 120 for householder applications. Although HBF has previously accepted the case for a reasonable increase in fees on the basis of a similar increase in planning performance, it believes the proposed increases are difficult to justify. Can we really expect a 450% increase in fees to deliver a 450% increase in planning efficiency? It seems unlikely, said Pierre Williams for HBF. Planning Minister Keith Hill, said: Raising fees by higher amounts sooner is necessary to help authorities deal with their applications workload. (FT)
Tories Pledge to Save Greenbelts Middle-Age Spread
The Conservatives are gearing up to fight the governments housebuilding programme as a major General Election issue. Tory strategists believe their green approach could have a decisive impact and will vow to tighten the Green Belt. Shadow Housing Minister John Hayes, said: Under John Prescott, the Green Belt is suffering from middle-age spread. He should tighten it sharply, not try to camouflage the loss of precious countryside by moving the Green Belt ever further outwards. (Times, Guardian)
Redrows Upbeat Outlook
With a solid performance over the past six months and a healthy-looking forward order book, Redrow is upbeat about the year ahead. Announcing half-yearly completions up to 2,111 from 1,996 over the same period in 2003; average prices up 22,300 to 175,000 and forward sales only marginally down from 2.072 to 1,948 over the year, CEO Paul Pedley said his company was well placed to operate in more normal market conditions. He added: Even if we see a spring market that is perhaps not as strong as we would have liked, its not that we have lost that market, its just been deferred. Analysts agreed with that statement, with one saying: The fundamentals driving the market are unchanged and while market conditions are more challenging than they have been in recent years, they remain reasonably robust. The share price firmed up 4p to 378p. (Times, Mail)
Developers Home in on Leafy Suburbs
New planning laws and PPG3 in particular are threatening Britains suburbia and spawning a new breed of nimby. A growing number of residents in these areas are complaining that increasing numbers of large Victorian and Edwardian houses on large plots are being demolished to make way for new high-density development, especially flats. A protest group, SAVE Britains Heritage, said: This is a real problem. These houses are not in conservation areas and developers, running out of space, are creating their own brownfield sites in order to build flats and make money. HBF called on the government to put more investment into improving the viability of ex-industrial brownfield sites but added: Theres no desire to develop greenfield sites but if you make it difficult to build on one area of land, you put the squeeze on somewhere else. (Telegraph)
Rise of the Urban Bee
Urban bees are producing five-times more honey than their country cousins thanks to the concentration and diversity of plants in gardens, parks and squares. Beekeepers also reckon the quality of urban honey is superior. (Mail)
HBF Note: Another piece of evidence that helps dispel the myth that undeveloped land is more environmentally sound than developed land.