A weekly news summary covering all aspects of the housebuilding industry. Available to members only.
Economic News
Interest rates left unchanged
As had been widely expected by analysts, the Bank of England’s Monetary Policy Committee (MPC) decided to leave the repo rate unchanged at 4.50%. The MPC’s next Inflation Report, to be published on 16 November, will be closely watched for signs of what the MPC’s next move is likely to be.
(www.bankofengland.co.uk)
CBI calls on the government to cut the fiscal deficit
The Confederation of British Industry (CBI) called for a slowdown in the growth of public expenditure in its recommendations for the pre-budget report. The CBI called for a reduction in the business tax burden by the end of this parliament, as well asking the government to “re-open its spending plans for 2007/8 to constrain the growth of total spending over this period to 10% - in line with GDP growth – rather than the 12% planned.” The CBI also said: “The government must strive for continued value-for-money improvement in public spending delivery by implementing the Gershon Review in full, and going further to create new incentives to transform public services.”
(www.cbi.org.uk/)
Political Events
David Davis attacks government plans
Conservative leadership contender David Davis has attacked the government’s plans for more than 720,000 new homes to be built in the South-East over the next 20 years. In a speech to grassroots party members in Sussex, Mr Davis said: "Mr Prescott's housing policy amounts to bulldozing homes in northern towns and cities while concreting over large parts of the countryside in the South. If he gets his way, New Labour will build 26 towns the size of Slough on England's green fields." (Newsquest)
Company News
Bovis say that reservations are above last year’s levels
Bovis Homes gave a trading update and Chief Executive Malcolm Harris said: “Further to the update included within the Group's interim results statement issued on 12 September 2005, sales activity levels have been satisfactory. Cumulative reservations for the current year are now ahead of the comparative position in 2004. The current outlook for the year ending 31 December 2005 is unchanged.”
(www.bovishomesgroup.plc.uk)
Taylor Woodrow also report a modest improvement in demand
Taylor Woodrow’s trading update gave a fairly positive view of the UK market: “Demand is slightly stronger than at this time last year, but the market is competitive and margin pressures remain, as we have previously indicated. Our overall net reservations since the end of June are running some 15% ahead of the same period last year, from slightly fewer sites.”
(www.taylorwoodrow.com)
Redrow to focus on margins
Redrow chairman Robert Jones has outlined the firm’s plans to protect margins in 2006 as slower market conditions are expected to continue. Speaking at the plc’s AGM, Mr Jones said: “The market has remained competitive with incentives continuing to be widely promoted within the industry and Redrow has maintained its focus on the protection of margin to maximise the value derived from its landbank. Redrow’s strong forward sales position at June 2005 has been supported by our sales performance in the new financial year with both reservations and sales outlets approximately 10% higher than in the same period last year.”
Mr Jones added: “The Group has already sold over 90% of its anticipated legal completions for the year to June 2006. As previously indicated, legal completions from ‘In the City’ will be lower in number than in the last financial year and the average selling price will also be below last year reflecting geographical mix.”
(miranda.hemscott.com)
Housing Market
House prices up 3.5% over the last year
The Land Registry reported that average house prices rose by 3.5% between the third quarter of 2004 and the same period this year. This compares to Nationwide reporting a 2.2% rise and Halifax a 3.0% rise for the same period. The detailed breakdown showed that the biggest constituent rise was a 9.3% increase in the price of newly built detached homes. In contrast, the price of new flats fell by 5.7%. The Land Registry also reported that the number of sales over the quarter were down 15.4% in comparison to the third quarter of 2004
(www.landregistry.gov.uk)
City bonuses to boost London market
The London housing market is expected to receive a significant boost due to large bonuses being paid to City workers. Research by Savills forecasts that house prices in central London will rise by 5% in 2006, with a feed through into the South East and Greater London, both of which are forecast to see prices rise by 3%. In contrast, the other English Government Office Regions are expected to see prices fall back next year, with the northern regions forecast to see the largest declines of 3 to 5%. (Times, Independent)
Other News
Private house building volumes down in the third quarter
The number of homes built by the private sector in England and Wales was lower than in the same period a year ago, according to official house building statistics reported by the Office of the Deputy Prime Minister. Private housing starts in England were down 2.9% on the same period a year earlier at 41,331, while the number of private completions fell by 7% to 33,337. Private starts fell by 11.6% in Wales, although this follows strong increases in the two preceding quarters, while completions were 1.3% higher. When the public sector is included, the number of starts in England was up 0.7% from the third quarter of 2004, while the total number of completions was 4.7% lower.
The ODPM pointed out that most of the fall in completions occurred in London and the North West, partly due to comparison with a relatively high number of completions in the third quarter of 2004.
(www.odpm.gov.uk)
Brownfield use and densities continue to rise
The proportion of new dwellings built on brownfield land in England rose to 70% (including conversions), up from 68% in 2003, and considerably higher than 50-55% in the late 1990s, according to updated Land Use Change Statistics (LUCS) published by the Office of the Deputy Prime Minister (ODPM). The average density at which new homes were built rose to 40 per hectare in 2004, up from 34 in 2003, and considerably higher than 24-25 from 1994 to 2001. All the regions exceeded the government target of 30 dwellings per hectare for the first time.
While these figures are unchanged from the previous estimates for 2004 published in July, the percentage of new homes built on brownfield land in 2003 was revised up by 1%.
(www.odpm.gov.uk)
Government slammed for reduced low carbon building fund
The Chartered Institute of Building (CIOB) has criticised the government for the level of funding allocated to its new three-year low carbon building programme (LCBP). The £30 million programme, which will come into effect on April 1 2006, replaces the DTI’s clear skies and major PV demonstration programmes. But its grant pot is less than those of the two existing schemes.
CIOB sustainability spokesman Dave Hampton said: “This funding is welcome but represents £13 million less than has been spent on the clear skies and major photovoltaics demonstration programmes since 2002. Why not add an extra zero or two on the budget; surely our children are worth it? Establishing a low carbon built infrastructure is likely to be the best investment UK plc could ever make.
With the public becoming more aware of the massive indirect or 'external' costs of fossil fuel dependence –both the cost of the oil and the costs of the CO2 emissions – the budget for schemes like this could justifiably be £3 billion, not £30 million.”
(www.ciob.org.uk)
EP invites developers to transform “Greater Manchester’s best kept secret”
Regeneration agency English Partnerships, with Tameside Council and Contour Housing Group, have invited house builders and developers to transform a former council estate in Tameside, Great Manchester. The chosen developer is to lead on building new private housing as well as a shopping and community centre. Paul Spooner, English Partnerships’ regional director for the North West and West Midlands said: ”This opportunity is exceptional - Hattersley has all the potential to be transformed into a highly desirable community. The introduction of high quality private housing is part of a programme of activity set to re-shape the area. Along with our partners, we are looking for developers and builders of the highest calibre to help deliver a community fit for the 21st century.”
(www.englishpartnerships.co.uk)
Paul Samter
Senior Analyst - Economic and Policy Affairs
Home Builders Federation
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