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HBF Weekly News Summary July 12, 2001
Faulkner Attacks Planning
New Housing Minister Lord Faulkner has launched an early and “scathing” attack on the planning authorities accusing them of wasting money and time in failing to decide applications quickly enough. New figures reveal just 63 per cent of applications are decided in eight weeks and just 30 councils managed the government target of deciding 80 per cent of applications in eight weeks with 44 managing fewer than 50 per cent over the same period. Falconer said: “All users of the planning system, including businesses, have a right to expect decisions in a reasonable time. The performance of Las in handling applications must be improved.” (Planning, Housebuilder)
Boom to Hit Wall
The current surge in house prices is expected to splutter to a halt later in the year as the housing market feels the effect of the economic slowdown. An increasing number of economists expect the current flurry of house buying – stimulated by low interest rates aimed at boosting the rest of the economy – cannot continue. But predictions vary and the general consensus is that property price inflation will ease, or stop, rather than crash. HBF agrees a slowdown is likely but dismisses thoughts of a crash. (All newspapers and trade publications)
Big Borrowers Most Likely to Suffer
If, or when the slowdown comes, first time buyers who have borrowed excessively are expected to fare the worst as just a small rise in interest rates could result in unmanageable mortgage repayments. Several top end estate agents are now reporting a big drop in buyers, and the FSA has warned that too many lenders are allowing borrowers to over-stretch themselves. Average prices in England and Wales now stand at £110,570 while average earnings are £22,000. Those key workers who have been able to buy in the most expensive areas are particularly at risk. (Express, Independent)
Bootle Warns of Worse to Come
Economic advisor to Deloitte & Touche, Roger Bootle, explains his fears for the market in a Sunday Telegraph article. He argues that house prices have not increased in real terms over the past 40 years as much as most people think. He suggests countrywide that the market will slow rather than fall except in London and especially at the top end of the market. A collapse in City bonuses is to blame for leading the slowdown form the top.
North South Gap Widens
The gap between house prices in north and south is widening according to the Halifax. The average London property has increased by £474 a week over the past year, and is now three times the cost of the average home in the North. The economic disparity is being compounded by manufacturing in the North calling for interest rate cuts while confident southerners want lower rates to spend their way out of the looming recession. (Mail)
Cost of London Living Soars
Londoners may earn more than others, but they need to because of the cost of property. The Halifax’s economist Martin Ellis says the property market might be due for a slowdown but insists a slump is not on the cards. The most pressing concern is that soaring prices could limit the number of first time buyers able to get a foot on the housing ladder. (Telegraph)
Renewed Calls for Flexible Affordability Targets
Rigid quotas on affordable housing provision will hamper regeneration and economic development a new economic development strategy for London has concluded. The Thames Gateway London Partnership – an alliance of east and south east boroughs and universities – says Mayor Ken Livingstone’s strategy for a 50 per cent affordability quota is ill-conceived and could concentrate affordable homes in south eastern boroughs at a time when they are emerging as flourishing and socially balanced part of the capital. (Regeneration and Renewal) Full report available from www.thames-gateway.org.uk
Lack of Housing Could Damage Economy
Long-term under investment in housing could damage the economy in the same way that the HNS and railways have suffered from lack of investment. These are the findings of the housing Research Foundation in its report: The Economic Role of New Housing. Although the report admits that not enough research has been carried out to determine the extent and impact of housing under-investment, the signs are that urban deprivation and key worker affordability problems are a clear indication that the matter needs further investigation. (Housebuilder)