A weekly news summary covering all aspects of the housebuilding industry. Available to members only.
Political News
AHIPP to roll out HIPs
The Association of Home Information Pack Providers (AHIPP) announced that it will start the roll out of the packs in six locations (Southampton, Newcastle, Northampton, Bath, Huddersfield and Cambridge) on 6 November, despite the Government U-turn in deciding not to make the Home Condition Report a compulsory part of the HIP.
AHIPP Deputy Director General Paul Broadhead commented: “The Government’s decision to make the HCR a voluntary part of the HIP was spineless and unnecessary and was a decision made purely for political reasons. It is now up to industry to pick up the pieces and deliver its benefits to the consumer. Many appear to have forgotten that the HIP was introduced to assist in providing a more efficient and effective home buying and selling process for the consumer and we are confident that despite the Government’s recent floundering the roll out will be a success.” (AHIPP Press Release)
Government Launch Design and Access Statements
As of 10 August, all developments applying for outline permission will have to provide a Design and Access Statement, following rules laid by the Government in April this year.
The statements will set out how elements of design such as character and disability access have been considered, and will give local authorities greater understanding of what is being proposed and what the final development might look like.
Applicants must demonstrate consideration of the layout, appearance, scale and landscaping to ensure good design, and that they have thought carefully about how everyone, including disabled people, the elderly and young children will be able to travel to and use the places they want to build.
A good practice guide on how the statements will work has been issued by the Commission for Architecture and the Built Environment (CABE). The guidance gives practical advice for developers and local authorities on what will need to be included and how the statements should be interpreted. (DCLG Press Release)
Economic News
Bank hints that rates may rise further
The Bank of England hinted that interest rates could rise further, following last week’s 25 basis point increase, in its quarterly Inflation Report. The Report outlined the Monetary Policy Committee’s (MPC) forecasts for the economy over the next three years. The forecast is for inflation to “rise further above the 2% target [it currently stands at 2.5%] in the first year… but then to ease back towards the target”. The economy is expected to grow at around its average rate of the last decade over the three years as a whole, picking up “a little at the start of the projection”.
The MPC saw the risks to both growth and inflation as broadly balanced, “but there is greater uncertainty over the outlook for CPI inflation, particularly in the near term”, with capacity utilisation “thought to be rather higher than estimated in May”, but “there is little sign yet of tighter conditions in the labour market”. The projections are based on market assumptions for the future path of interest rates, which is for the repo rate to rise by a further 25 basis points to 5% over the next year to eighteen months. The MPC notes that if projections were based on current rates, then the “profiles for growth and inflation are both higher than those based on market rates”. (August Inflation Report)
Patchy pick up in high street sales
Retail sales in July were up 3.4% on a like for like basis compared to a weak July 2005, according to the British Retail Consortium (BRC). The three-month trend rate of growth fell to 3.1% in July from 4.1% in June, while total sales were up 5.6%.
BRC Director General Kevin Hawkins commented: “A lot of this growth, against a weak comparative a year ago, was driven by the food sector, helped by the weather, and heavy discounting across many product categories. Most other sectors struggled or had mixed fortunes. Talk of a general upturn in consumer spending is wide of the mark – even more so since the MPC increased interest rates.” (BRC July Retail Sales Monitor)
Housing Market
House price growth accelerates in the second quarter
The annual rate of house price growth accelerated to 7.7% in the second quarter, from 5.1% in the first three months of the year, according to the Land Registry. However, the Land Registry data reveal that the price of new homes fell slightly, by 0.6% over the year, a development that was driven by a fall in the average price paid for new flats (-1.3%), as all other types of new homes saw a rise in prices. The volume of sales over the second quarter was up 24% compared to the same period a year earlier, with larger increases seen towards the more expensive end of the market. (Land Registry Q2 Residential Property Price Report)
House prices to rise 5% in 2005 according to Nationwide
Nationwide upgraded their forecast for house prices to increase by around 5% during 2006, up from an earlier forecast of 0-3%, citing a resilient market so far this year in spite of deteriorating affordability, which suggests “that there is still enough demand in the market to support prices”. The lack of supply is expected to be the key factor supporting prices, with Nationwide estimating that the rate of house building will fall short of the projected rise in the number of households by around 47,000 per annum, and “such pent up demand for housing can only be supportive of prices, both now and in the future”. Prices are forecast to grow at, or just above, the rate of earnings growth in 2007. (Nationwide House Price Index)
First Time Buyers paying more for mortgages says CML
Figures from the Council of Mortgage Lenders have shown that in June the average first time buyer, was paying 3.21 times their income to obtain a mortgage, the highest on record. This was up from 3.20 times the average income in May, and 3.06 times in the same month last year. (CML Press Release)
Other News
CPRE report on social indicators in the Thames Gateway
The Campaign to Protect Rural England (CPRE) published a report on 10 “key statistics” of social and economic performance in the Thames Gateway Growth Area. The CPRE supports the Government’s objectives to promote urban regeneration in the area and make it an attractive place “to live and work, and bringing derelict land back into use will help reduce the pressure for sprawling new housing estates and other development which damages the countryside and generates traffic”. The report calls for more investment in jobs in urbanized areas, 100% of new housing to be built on brownfield land with several London boroughs cited as not matching the capital’s 80% target, new dwellings in the area to be built at an average density of 80 dwellings per hectare, while “the need to provide more homes and infrastructure in the Thames Gateway should not be allowed to cause the area’s intrinsic environmental value to be harmed”. (CPRE Report)
HBF Comment: In response to the CPRE report, HBF Executive Chairman Stewart Baseley said: “The task of urban regeneration is about more than merely measuring targets or proportions. Desirable communities are created through the provision of a mix of housing types in a choice of locations throughout the Thames Gateway. Developments on brownfield sites should be encouraged where feasible, but a 100% brownfield target combined with very high density targets will risk the provision of homes which people will not want to buy. Given the chronic shortage of family-size homes, acting in such a way will only serve to prevent buyers from living in the homes which they desire.” (HBF Press Release)
Councils could get £120m reward for new house building
Councils are to be given cash incentives potentially worth up to £120m a year if they approve new housing developments, under Government proposals. Ministers want to use a fund, originally set up in 2003 to help local authorities modernise their planning offices, to reward those town halls that boost house construction in their areas. Councils would have considerable freedom on how they spend the money, according to a consultation document.
The Department for Communities and Local Government intends to use the planning and delivery grant - totalling £605m between 2003 and 2008 - to increase the number of homes being built in England to 200,000 a year, up from current levels of 160,000 a year.
The new incentives are in line with the findings of an independent review on housing supply by Kate Barker. The Government has earmarked £120m for the new planning grant in 2007-08. But there will soon be much bigger incentives for local authorities to accept new house building. In response to the Barker review, from 2008 the Government intends to raise £1bn by imposing a Planning-gain Supplement on property developers. (Financial Times)
New buyers reach record heights but are reluctant to put own houses on the market
Around one and a half million new buyers registered with estate agents in the UK last month, the highest in over two years. 1,516,000 new buyers registered with UK estate agents in July according to Your Move Estate Agents. While the vast majority of these are existing home owners, these property buyers are refusing to put their own property on the market.
Only 633,000 properties are currently on the market in the UK, a figure that has remained broadly stable since the beginning of the year. Buyers are out numbering sellers by over 2.5 to 1.
Reflecting the relative shortage of properties for sale is the increase in viewing per property which, at an average of 3.2 in July is up 23% on the same month last year. (Your Move Website)
£1.2m Housing Corporation innovation and good practice grant cash boost for 25 projects
Twenty-five innovative projects across the country are set to benefit from a £1.2m cash windfall, as part of a package of grants to encourage innovation and good practice in housing, the Housing Corporation has announced. (Housing Corporation Press Release)
South East growth bill is £38 billion, says assembly
Key infrastructure needs across South East England amount to £38 billion over the next 20 years, the South East England Regional Assembly has told the Treasury. In preparing the South East Plan the Assembly has built up a robust evidence base on infrastructure requirements by working with local authorities, partners and delivery agencies on an extensive programme of research.
Responding to the Treasury's review of infrastructure needs for housing growth, the Assembly says that regional implementation plans are crucial in identifying infrastructure requirements and co-ordinating funding streams. Failure to plan properly now will lead to higher costs in future years. (SEERA Submission)
Parents of students price new buyers out of market
Rising house prices and increasing pressure on student accommodation are turning record numbers of parents into landlords who provide "handout homes" for their student children.
A survey of Britain's 2.6 million second properties, by the Future Foundation a consumer think-tank, indicates that 83,000 of them were bought by parents for their children while at university, an increase of nearly a third since 2000.
That trend looks likely to continue as more people study at university and living costs increase. The university population has grown from 400,000 in 1963 to two million today, creating a demand for accommodation that universities are unable to meet. (Times 8 August)
Consultation/Key Publication Dates
Code for Sustainable Homes Implementation Autumn
Home Information Packs (HIPs) Revised regulations 14 June
HIPs – 10 to 12 planned trials Autumn 2006
HIPs Introduction 1 June 2007
Consultation on DCLG structure June 2006
Implementation of new DCLG structure September 2006
HBF Events
HBF Annual Planning Conference 14 September
Housing Market Intelligence 2006 10 October
Housebuilding 2006
Business Design Centre, London N1 10 &11 October 2006
For a full list of HBF events please visit HBF Events & Meetings
For details of HB Media events click here
Paul Samter
Senior Analyst - Economic and Policy Affairs
Home Builders Federation
Housebuilding 2006
10 and 11 October 2006, Business Design Centre, London N1
Now in its third year the exhibition, housing market intelligence conference, management conference programme, free briefings and the Housebuilding Innovation Awards bring together all that is new in the housebuilding industry.
Visit http://www.housebuilding2006.com/ for more information.
Pre-register today to be entered in to a prize draw to win two trips to the Ashes Down Under (match tickets, flights and accommodation)