A weekly news summary covering all aspects of the housebuilding industry. Available to members only.
Economic News
Interest Rates left on hold
As had been unanimously anticipated by economists and market commentators, the Monetary Policy Committee of the Bank of England left the repo rate unchanged at 4.5%. This followed a 25 basis point cut at the August meeting.
(http://www.bankofengland.co.uk)
Gloom continues on the high street
The British Retail Consortium (BRC) reported that the summer slowdown in consumer spending continued in August, with like-for-like sales down 1% on the same month a year ago, although total sales rose by 2.9% year-on-year. Kevin Hawkins, Director General of BRC, commented: “No one should be fooled into believing that the slight improvement relative to July indicates a change in trend. Any growth came from heavy discounting, which is not sustainable - especially as retailers’ margins are already being squeezed by rising labour, property and energy costs. The underlying position is still weak and unlikely to improve unless and until there are further cuts in interest rates and these work through to the consumer. Anything else is wishful thinking.”
(http://www.brc.org.uk)
DTI reports a rise in private housing output in the second quarter
The Department of Trade and Industry’s construction output data for the second quarter revealed an increase in housing work. New private housing work rose by 7% from the previous quarter, and stood 9% higher for the year to the second quarter compared to the previous year. Total construction output was unchanged for the year to the second quarter compared to the previous year, although it was up 5% compared to the first quarter. The data also revealed that total employment in the construction sector rose by 3% over the quarter to a seasonally adjusted 1.81m.
(http://www.dti.gov.uk)
Company News
Profits on UK operations fall at Taylor Woodrow…
Taylor Woodrow announced interim results for the six months to 30 June, and revealed that group profits before tax had fallen 3% on the same six months a year ago to 170.4m. This was supported by a 38% jump in operating profits, to £74.4m, from US operations. UK housing operations saw revenue fall from £823.6m in the first half of 2004 to £681.2m in the first six months of 2005. The number of UK completions was down 17% to 3,194 over the period. The UK land bank was increased by 8% to 34974 plots.
Chief Executive Iain Napier said: “In the first half of 2005, Taylor Woodrow has continued to benefit from a diversified market strategy. Overseas profit from operations increased by 39% and at the same time we have managed our UK housing business well in a more difficult market. The performance from our overseas markets continues to be excellent. The outlook in the UK remains uncertain for the rest of this year, although the longer term market fundamentals are strong.”
(http://www.taylorwoodrow.com)
… and at George Wimpey
George Wimpey also saw a sharp divergence in performance between UK and US operations in its interim results for the six months to 3 July. Group profit before tax fell 18% to 130.7m, with US operating profit up 64%to £54.5m. UK housing operations saw turnover down 10%, on the first half of 2004, at £858.4m, with UK operating profit down 31% to £106.7m. UK housing completions were 10% lower than a year earlier at 4,576 units and the land bank was increased by 7% to 54,380 plots.
Chairman John Robinson offered a fairly cautious view of the market: “We are only just moving out of the holiday season, normally a very slow period for the
UK housing market. Despite this, the UK market has remained steady at sales rates similar to those seen through the spring. Furthermore, interest rates have fallen, albeit modestly. Nevertheless it is premature at this stage to predict how the market will develop through the autumn. In our own projections we therefore continue to take a fairly cautious view of the short term outlook and assume it will remain stable at similar levels of trading to those we have seen through the year so far.”
(http://miranda.hemscott.com)
… with David Wilson witnessing lower housing profits too
The Wilson Bowden group also announced interim results for the first half of 2005, with pre-tax profits falling 13% compared to the first six months a year earlier, to £98.5m. Results for housing division, David Wilson Homes, saw a 20% fall in operating profit to £90.2m, on turnover of £459.3m. David Wilson Homes completed 2,190 homes, down 8.8%, with the average selling price falling from £211,900 to £194,000. Chairman David Wilson commented: “Our long-term strategy of significantly increasing the number of housing outlets mitigated the impact of the condition in the UK housing market.”
(http://www.wilsonbowden.plc.uk)
Correction to last week’s summary
Last week’s story “House Builders likely to benefit from Housing Corporation money” listed several house builders who had qualified and have subsequently been invited by the Housing Corporation to bid for affordable housing grant. This list should have included Croudace Homes as well.
Housing Market
Halifax report jump in prices in August
The August Halifax House Price Index saw a 1.6%, seasonally adjusted, rise in house prices over the month, leaving prices 2.5% higher than a year ago. This was the largest single monthly rise since last September. Halifax attribute much of the rise to the cut in interest rates with Chief Economist Martin Ellis commenting: “This pick-up in monthly house price inflation is consistent with the continuing upward trend in market activity in recent months and the previous pattern of house price movements when the Bank of England begins to reduce interest rates.”
(http://www.hbosplc.com)
Other News
HB05 a hit with the industry
Housebuilding 2005, HBF's two day event for everyone involved in the business of building homes, this week attracted thousands of visitors to its exhibition and comprehensive conference and briefing programme at the Business Design Centre in London.
More than 100 exhibitors displayed their wares to the industry, while delegates also flocked to one of eight major conferences running at the venue. These included the high level Housing Market Market Intelligence and Sustainability in Housing conferences, and sessions focusing on Marketing, Building Regulations, Modern Methods of Construction, Land Supply and Skills.
"The event has yet again proved to be a huge success," said Ben Roskrow, publisher of Housebuilder Publications which organises the Housebuilding show. "It was pleasing to see so many people from the industry come together for the two days to see the show and attend the conferences. We are already looking forward to bringing the industry Housebuilding 2006."
The inaugural Housebuilding Innovation awards were also staged during HB05 at The Savoy and proved to be a great success.
HBP publish 2005 guide to the industry
At the Housebuilding 2005 conference, Housebuilder magazine published Housing Market Intelligence 2005, a comprehensive guide to the industry including a list of the top 75 home builders, articles on the economic environment, city perspectives on the industry, planning issues and much more. The report is available for £195 for HBF members and £295 for non-members. To order a report, contact Helen Board at helen.board@house-builder.co.uk or on 0207 9601634.
Winners of the Housebuilding Innovations Awards announced
The winners of Housebuilders’ Housebuilding Innovation Awards were announced at a gala event. The winners were:
· The Environmental Award (sponsored by Hanson Building Products): Crosby Homes Special Projects (NW) for Greenquarter, Manchester.
· Best Innovation in the Use of Materials and Products (sponsored by Marley Roofing): Barratt Developments for Advance Housing.
· Best Customer Satisfaction Initiative (sponsored by NHBC): Miller Homes for www.millerhomes.co.uk.
· Best Partnership Between Housebuilder and Commercial Developer (sponsored by Burdens): Barratt West London and Thornfield Properites for Axiom, Feltham, Middlesex.
· Best Training/Staff Initiaitive (sponsored by Jeld-Windows & Doors): Persimmon Homes.
· Best Partnership with a Supplier (sponsored by Robust Details Limited): Haslam Homes and Wolseley UK.
· Best Partnership Between Housebuilder and Public Sector (sponsored by Ideal Standard): Countryside Properties and SEEDA for Chaltham Maritime, Kent.
· Best Example of Community Consultation (sponsored by Whirlpool): George Wimpey East Midlands for Mawsley Village, Northamptonshire.
· Most Innovative Use of Technology (sponsored by The Housing Forum): David Wilson Homes.
· Best Design Initiative/Partnership with an Architect (sponsored by Arrow Distributors Ltd): David Wilson Homes and Design Homes for escape project.
CEBR predict a surge in the Buy-to-Let sector
The Centre for Economics and Business Research published research that predicts that the private rented sector will increase by a million homes to 3.5m over the next eight years, with is expected to lead to an expansion of the Buy-to-Let sector. The main factors behind this anticipated rise were cited as an increase in immigration, changes to pension legislation and a rise in the number of single person households. (Times)
CPRE continues campaign against building in countryside
The CPRE has warned that England’s ‘real countryside’ could be lost ‘within a generation’. A new report 'Your countryside, your choice’ commissioned by the organisation opens with a portrait of England in 2035 in which the countryside as has all but disappeared from much of England. The report claims there are a number of threats to the countryside including increased house building and increased car usage.
On housing the CPRE propose that the aim should be “for at least 75% of new housing on previously developed land at an average density of at least 40 units per hectare”. HBF has commented to correct CPRE’s depiction of the mass loss of the countryside and Rob Ashmead appeared on Radio Five Live to make this point this morning.
(http://www.cpre.org.uk)
Housebuilders’ improve sustainability performance
The WWF published ‘Investing in sustainability: progress and performance among the UK’s listed house-builders revisited’, part of their One Million Sustainable Homes Campaign. The report showed that all twelve of the listed house builders studied substantially improved their performance in environmental management and sustainability over the last year.
The report concluded: “The increasing emergence of drivers for sustainable homes coupled with the increasing demand for new homes in the UK now makes an even more compelling and urgent case for house-builders to integrate sustainability into their business strategies. Business benefits available to companies can include: gaining planning permission more easily; winning more contracts with clients or partners that demand high sustainability standards; mitigating business risks; making savings through greater efficiency and lower resource use; enhancing their reputation with a wide range of stakeholders and differentiating themselves within the market.”
(http://www.wwf.org.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