A weekly news summary covering all aspects of the housebuilding industry from Pierre Williams, HBF's head of media, available to members only.
Prices Stumbled in February…
House prices fell by 1% in February according to government figures released yesterday. The Office of the Deputy Prime Minister said average prices dropped from £162,559 in January to £160,937 in February but it insisted this was due to the traditional seasonal slowdown rather than an indication that the market had turned. It means house price inflation for the year – officially at least – was 9.8%. This is in marked contrast to lenders’ indices putting inflation at 17-18%. (BBC)
HBF Note: If correct, these figures should offer some reassurance to the housebuilding industry. Prior to today’s news, housing market doom-mongers have had a busy week. The market’s most prominent “Dr Doom”, Tony Dye of Dye Asset Management, this week predicted a 30% fall in London house prices in real terms over the next five years and ensuing falls across the rest of the country. His views are backed up by economist Roger Bootle who says only the timing of the fall is in question. Nevertheless, optimists still outnumber the pessimists (all media)
…But No Let Up For FTBs
The slight slip in prices during February does not apply to first time buyers. According to ODPM figures, existing owners trading up would have to pay an average 8.7% more for their new purchase than a year ago. But in line with market trends, it is the lower end of the market that has seen most growth and that means the average first time buy is now 12% higher than a year ago. This ties in with earlier figures showing first time buyers at their lowest level since records began. (FT)
NHS Sites Earmarked for Big Housebuilding Plan
More than 100 surplus NHS sites are to be sold off to build 15,000 homes of which 5,000 will be affordable. The deal means the transfer of land and buildings from the Department of Health to the ODPM and its subsequent management/disposal by English Partnerships. However, any department wishing to sell surplus land must first place it on a register for 40 days allowing EP or any other government department to buy it first at “market” rates.
HBF Note: This is the most overt sign yet of a policy that seems to be gaining popularity – allowing the private sector to bid for publicly-owned land but only after government departments/quangos have been handed the menu first. Previous examples of this practice have already emerged in which EP has stepped in to buy sites where private developers have already borne considerable costs in bid proposals. Moreover, the scale of the sell-off is also in question with some sites already sold and others in advanced stages of development.
Booming Bellway Sets Ambitious Target
Bellway has beaten analysts’ expectations with a 36% rise in interim profits and set the scene for a huge rise in growth to 10,000 units a year by 2010. That target looks achievable as the company increases its involvement in big, government-backed, regeneration schemes – not least Barking Reach. The company’s interim figures show turnover up more than 20% to £436m, sales up 10% to 2,728 and average prices up 8.6% to £156,900. For the six months to the end of January, pre-tax profits were up to £77.4m – way ahead of analysts’ forecasts of £69.3m. (FT, Independent, Mail, Express, Telegraph)
Slough Flats Glut
According to the Sunday Times, Slough has “too many flats” – a surplus of flats to rent over possible tenants. The recent surge in buy-to-let is the source of the problem according to a local estate agent. By contrast, the agent says prices are still soaring for houses in commuter zones around the town. (Sunday Times)
HBF Note: Whilst this report hardly constitutes a scientific study, this first open statement by an estate agent during an unprecedented housing shortage should ring warning bells on an over-reliance on city and town centre flat building. HBF highlighted this huge shift away from detached housebuilding in the Telegraph last month. Reinforcing this message to set the scene for a more balanced approach to housing output would - in the opinion of this author at least - be prudent.
May Interest Rate Rise “Inevitable”
The Bank of England’s decision last week to peg interest rates at 4% means a rise next month is “almost inevitable”. A spokesman for the Bank of Scotland said: “There is a 90% chance that rates will go up in May unless we see a marked deterioration in data.” Other analysts concluded: “A May rate rise seems inevitable.” (FT)
Polish Up On Those Skilled Trades
Forward-thinking business leaders are gearing up to take on the best eastern European skilled workers available the moment 10 new states join the EU on May 1. Polish construction workers look set to be in particularly strong demand. A construction recruitment specialist, Dermot McGinley, said: “The Polish workforce is rich in the sort of skills that we were rich in 20 or 30 years ago. UK school leavers are no longer learning manual skills but are being guided in another direction.” (FT)