A weekly news summary covering all aspects of the housebuilding industry. Available to members only.
ECONOMIC NEWS
FINANCIAL SERVICES FIRMS EXPECT GROWTH
The latest Financial Services Survey, published this week by the CBI and PricewaterhouseCoopers, shows optimism about likely economic growth. June's survey found that 33 per cent of financial services firms had increased business during the past three months, whilst the same percentage said business decreased. There was a small decline in profits as pricing power weakened, with a balance of minus seven per cent reporting a fall. Financial services firms expect to step up investment in land and buildings, and IT, over the next twelve months, more so than in the previous survey. Firms also continue to plan increased marketing expenditure. (http://www.cbi.org.uk)
CML PUBLISHES FIRST TIME BUYER RESEARCH
The Council of Mortgage Lenders has published major new research into people entering into the housing market for the first time. CML says the average purchase price paid by first time buyers has risen by 478% over the last 20 years. It estimates that prices would have to drop around 20% to bring prices in line with salaries for under-25s and calls on government and lenders to do more to address the issue. (http://www.cml.org.uk)
INTEREST RATES HELD AT 4.75%
The Monetary Policy Committee of the Bank of England have kept interest rates on hold at 4.75% for the 11th month in a row. The decision was made against speculation about a rate cut and calls for a reduction from the CBI. Expectations remain that rates will fall before the end of the year. Minutes of the MPC meeting will be published on July 20. (http://www.sky.com)
OLYMPICS LIKELY TO BOOST HOUSE PRICES
Financial bodies are reporting that areas benefiting from the 2012 Olympics in London are likely to see a significant increase in house prices - according to research carried out by HBOS. Tim Crawford, group economist for the Halifax said "Hosting an Olympic games encourages city regeneration and is usually accompanied by an improvement in facilities and transport links. These factors tend to be positive for house prices. Homeowners in Hackney and Stratford, could potentially reap similar benefits to other Olympic precincts over the longer term." HBOS concludes that the Olympic Village, improved transport links and 5,000 new homes will have a significant economic impact on this traditionally deprived area with average house prices in host venues increasing by 66% over five years. (http://www.hbosplc.com)
POLITICAL EVENTS
PEERS URGE CHANGES IN POLICY OVER CLIMATE CHANGE
The economic affairs committee in the House of Lords have asked the government to re-examine policy on climate change. Committee chairman Lord Wakeham called on the government to "give the Treasury a more extensive and more rigorous role in examining the costs and benefits of climate change policy and presenting them to the UK public". In their report the committee warned that the science of climate change leaves "considerable uncertainty about the future". "The balance between mitigation and adaptation needs to be re-examined," it added. The committee also suggests that government policy includes some "dubious assumptions" about the roles of renewable energy sources and of energy efficiency. (http://www.publications.parliament.uk)
‘STRONGER LEADERSHIP’ NEEDED FOR GREENER HOMES IN LONDON
Members of the GLA’s Environment Committee have said Londoners are losing out on the chance to benefit from a new generation of buildings that combine design excellence with cleaner and greener construction standards. Assembly Members have welcomed publication of the Draft Supplementary Planning Guidance (SPG) on Sustainable Design and Construction in London but criticised lengthy delays in releasing the framework that will help ensure new buildings are more energy efficient and use less water. The Environment Committee has warned that lack of leadership is holding back progress and told the Mayor of London, Ken Livingstone, more effort is needed to improve the design standard of new developments and that work on the guidance should be completed by the end of the year. Darren Johnson AM, Chair of the Committee, said: “There have been considerable delays in finalising the guidance and this has been very disappointing. What we urgently need is consistent London-wide guidelines in place as soon as possible. “Unless we start designing and building a new generation of homes and offices, which take advantage of the very best in environmental design and technology, then we are storing up problems for the future. “We need to make it easier for people to make their homes environment friendly and we need tough new planning policies to make sure that all new buildings are clean, green and energy efficient.” (http://www.london.gov.uk)
CABE REPORT ON GREEN SPACES PUBLISHED
The Commission for Architecture & the Built Environment (CABE) has published a new study into the benefits of green spaces in new build projects. ‘Start with the Park’ argues that a strong vision for public space and a strategic approach to delivering it are vital to the success of the Housing Market Renewal and Housing Growth Areas. CABE's Chief Executive, Dr Richard Simmons said: “By 2008 the government will have spent £38bn delivering its sustainable communities plan. It's not just about demolitions in the North and building more homes in the South. It's about creating neighbourhoods that people want to live in. Great parks and green spaces can be can be the making of a place. Poor quality spaces can ruin it. Anything which has to be demolished must be replaced by housing and public spaces of better quality. Carefully considered temporary uses of redundant space could help raise land values, whereas simply grassing it over and leaving it could further depress the market. In the Growth Areas too, good quality parks and open spaces are one of the best ways to ensure new communities blend harmoniously with old.” (http://www.cabe.org.uk)
NEW ADVICE ON ENVIRONMENTAL PLANNING PUBLISHED
New guidance setting out how the new planning system can ensure regional and local authorities deliver environmental quality has been published by the government’s main advisors on green issues. The advice has been drawn up by the Countryside Agency, the Environment Agency, English Heritage and English Nature. The guidance states: "Plans and strategies should be more ambitious about what can be done to enhance and manage the environment, plan for future change (including that brought about by climate change) and bring positive change to rural areas." Environment Agency CEO, Barbara Young said: “We believe in a strong and effective planning system. Good planning can help deliver environmental protection and improvement alongside economic growth and development".
MINISTER CALLS FOR PLANNING REFORMS
Housing and planning minister Yvette Cooper has said the UK housing market is “failing to respond to market conditions.” In her first major speech since being appointed as minister Cooper said planning policy had to be more responsive to housing need. “The challenge for us it to find the way that the planning system can effectively do that,” she said. This follows Barker review recommendations that said planning needed to react to market signals and that more land should be released for development by local authorities. Cooper went on to suggest the planning system would come under a wider review. “We are looking to simplify and improve section 106,” she said. She also added “there are changes we can make to PPG3” in order to assist in the release of land. Cooper also took the opportunity to take a swipe at “Conservative politicians who campaigned against housing growth in their area. The message this sends to first time buyers is ‘we don’t want you round here’,” she said.
SEERA CALLS FOR TARIFFS ON DEVELOPERS
The south east regional assembly’s planning committee has endorsed an eight-point infrastructure delivery plan for the region. It is now seeking a formal agreement with government on how the region’s infrastructure will be funded, including through developer tariffs. Councillor Keith Mitchell, chairman of SEERA’s planning committee said: “Infrastructure is a longstanding issue and a real problem in our region. We are concerned that existing and future service provision will get squeezed in development budgets without sufficient planning. This infrastructure concordat provides a positive package to address these problems, and we look forward to a constructive dialogue with government in the coming months.” The eight-point plan includes a recommendation that government funding be supplemented with developer contributions through section 106 agreements or infrastructure “tariffs.” It also proposes a clear timetable for the introduction of a planning gain supplement and details of what this would cover. (http://www.southeast-ra.gov.uk)
HOUSING MARKET
HALIFAX REPORTS PRICES ‘STATIC’
The Halifax House Price Index shows prices have remained static for the first half of 2005 with the annual rate of house price inflation falling to 3.7%, the lowest since March 2001. Prices in London have fallen by 1.1%, the first reduction in the capital in ten years. Martin Ellis, Chief Economist at The Halifax said “Housing market activity has stabilised following the sharp decline in the second half of 2004 with some signs of a steady improvement in recent months. The number of loans approved for house purchase increased for the fifth successive month in May, and Halifax Estate Agents has seen a steady level of sales since February.” (http://www.hbosplc.com)
GEORGE WIMPEY PROFITS DOWN
George Wimpey has announced that sales for the first half are down 17.5%. It was expected that first-half profits for 2005 would be lower than the record amounts posted in 2004. However the company said the results were not indicative of a slump in the housing market. Peter Johnson, Chief Executive said “Buying activity in the UK is currently well below where it was this time last year but there is no sign of a collapse. It is just a sign of rapid readjustment. It is tough but not catastrophic.” (http://miranda.hemscott.com)
FORWARD SALES AT REDROW ‘CUSHION’ SOFTENING MARKET
Starting the financial year with a record forward sales position has enabled Redrow to largely weather this year’s softening market, according to its pre-close trading update. The firm’s average selling price is up 11% on last year, standing at £172,000, with forward sales “ahead of the historic norm,” according to the statement. Redrow Homes’ year-end operating margin is anticipated to be 17% - “marginally lower” than the 19.8% achieved in the previous financial year.
“Whilst the establishment of this strong forward sales position did restrain margin growth in more favourable markets, it has now provided and continues to provide a cushion in the current market,” said Redrow. “Our forward sales strategy has enabled, and will continue to enable, the group to focus upon the maximisation of selling price and profit at a time when selling prices have been stable.” The trading statement also confirmed the promotion of Neil Fitzsimmons to the position of chief executive on August 1, and Paul Pedley’s concurrent appointment as executive deputy chairman. (http://www.thishouseisforsale.co.uk)
OTHER NEWS
GOVERNMENT ADVISOR PLAYS DOWN COUNCIL TAX REFORM
Sir Michael Lyons, the government’s advisor on council tax reform has called for a debate on how much people are prepared to pay for local services. Speaking to the FT Sir Michael said any proposals for changes in local taxation had to be supported by people, “We cannot just impose this on people. There is room for a much more energetic debate about what we want from local government and what people are willing to pay for.” Sir Michael is due to present recommendations on council tax reform to Ministers in December, but the timetable for any changes in council tax to be introduced has yet to be clarified. (The Financial Times).
NEW COMMUNICATIONS MANAGER AT HBF
The HBF’s new Communications Manager, Alex Hunter, is now working at Byron House. Alex is experienced in both local and national government communications and has been working in the Thames Gateway over recent years. He will be seeking to increase awareness of the HBF and positive messages about home building in general as well as improving communications with Members. He will be overseeing further improvements to the new-homes.co.uk website and the relaunch of the HBF website which will take place later in the year. Alex is happy to speak to Members of the HBF about any communications issues and concerns they might have, he can be contacted on alex.hunter@hbf.co.uk, 020 7960 1619 or 07803 181504.
Alex Hunter
Communication Manager, HBF
020 7960 1619