A weekly news summary covering all aspects of the housebuilding industry. Available to members only.
HBF News
Stewart Baseley accompanies Minister on fact finding mission to Europe
HBF Executive Chairman Stewart Baseley accompanied Housing Minister Yvette Cooper on a fact-finding mission to Europe. She challenged UK companies to plan and innovate now to beat designs and standards from Scandinavia and the Netherlands within ten years. Ms Cooper urged developers and planners to raise standards to meet the challenges of climate change: “The homes we build today will house our children and grandchildren for decades to come which mean they need to be sustainable. If other countries can do it so can we. The challenge now is for UK developers to create low cost and low carbon homes. We believe that new developments in the Thames Gateway and in areas like Northstowe can also lead the way.” (DCLG Press Release)
Mr Baseley responded to the Minister’s challenge in a press statement: “The Minister's vision is challenging. It is vital therefore, if we are to move standards forward successfully, that we have both the right policy and regulatory framework, and ensure we involve all key parties in discussions on delivery. The policy and regulatory framework needs to support and encourage commercially viable innovation. We also need to involve local communities, the supply chain and energy providers if we are to be able to provide solutions that work for everyone.”
“There is a major national requirement to increase housing supply and we must make this work for us in moving environmental standards forward. Coupling an improved supply of land for housing through the planning system with positive measures to support innovation is the best way to create a commercial climate that can underpin investment in innovation. For our part, we are also actively considering ways in which building regulations could be restructured and simplified to assist commercially viable advances. I very much look forward to discussing our thinking in this area further with the Minister." (HBF Press Release)
Economic News
Inflation edges up
The Bank of England’s target measure of inflation, the Consumer Prices Index, rose to 2.5% in August, up from 2.4% in July. This is above the centre of the Bank’s target level of 2.0%, +/- 1.0%. The main factors behind the rise were recreation and culture, higher prices for bedroom furniture, materials for household repair and maintenance, increasing gas and electricity prices and clothing and footwear. The former target measure RPIX (which excludes mortgage interest payments from the Retail Prices Index) rose from 3.1% to 3.3%. This is above the centre of the former target range of 2.5% +/- 1.0%. (August CPI Press Release)
Mixed news from the labour market…
There was somewhat mixed news from the labour market with the ILO measured unemployment rate at 5.5% in the three months to July, up from 5.2% in the preceding three months, and the total number of unemployed at its highest in nearly six years. In contrast, the claimant-count measure of unemployment declined by 3,900 in August, while this rate remained unchanged at 3.0%.
The data also revealed that the rate of earnings growth remained fairly steady compared to the previous month. Earnings including bonuses rose by 4.4% in the three months to July compared to the same three months a year earlier, a rate that has accelerated from 3.5% at the start of the year. However, once bonuses are excluded from the calculations, annual earnings growth edged down by 0.1% to 3.7%, a rate that has barely changed this year. (September Labour Market Statistics)
… while retail sales hold steady
The volume of retail sales rose by a seasonally adjusted 0.3% between July and August to stand 4.3% higher than a year ago. Sales increased by 1.5% in the three months to August from the preceding three months, a slight deceleration from 1.9% in the three months to July, but a faster rate of increase than was seen throughout most of 2005. (August Retail Sales Release)
Political News
Planning and Pollution Control consultation launched
A joint DCLG and Defra Consultation Document was launched on “Options for improving the way planning and pollution control regimes work together in delivering new development”. The Document outlines the Government’s desire for planning and the environmental permitting regimes to compliment each other, because “it is clear that in practice this is not always achieved”.
The Consultation focuses on “the interface of land-use planning and the Environment Agency’s responsibilities for waste management and pollution control permitting”.
The Document includes the HBF’s proposal to see “waste management activities on construction sites controlled through the planning process, with the planning permission also serving as the permit required by the Waste Framework Directive”. The Consultation closes on 6 December. (Consultation Document)
Plaid Cymru advocates first-time buyer grants
Plaid Cymru advocated introducing a grant for first-time buyers in Wales, where the Assembly Government would match a deposit of up to £5,000 on a pound for pound basis. Ieuan Wyn Jones, Plaid leader, said: “During my Wales Wide Walk, it became clear to me that the difficulty faced by first time buyers in securing a home is a major issue in Wales The cost of a home is way above the means of many young people because house prices have rocketed whilst average wages in Wales remain relatively low. I believe that an Assembly grant of £5000 would enable more young people to get on the housing ladder and I believe that it would be a very attractive plan.”
The party also commented: “Plaid are looking to include this plan in their manifesto for the 2007 election as part of a comprehensive housing strategy which will be unveiled later in the year. The party believes that housing will form a major plank of its manifesto proposals given Labour’s failure to invest in this area since 1999.” (Plaid Cymru Press Release)
Corporate News
Bovis report interim results
Bovis Homes reported interim results for the first six months of 2006, with pre-tax profits at £53.1m, up 17.7% compared to the first half of 2005, on turnover of £250.5m. The company completed 1,262 homes during the first half (of which 141 were social units), a 15.9% increase from the first half of 2005. The number of controlled plots with residential planning permission in the landbank was 12,524, a slight reduction from the 13,138 at the turn of the year.
Bovis Chairman Tim Melville-Ross offered an upbeat view of the market: “The UK housing market has demonstrated stability after a year of uncertainty in 2005. The fundamentals of the UK housing market remain sound. Consumer confidence has been robust during the first half of 2006, in contrast to the first half of 2005. House price increases to June 2006 reported by a number of external market commentators have suggested year on year price increases between 5% and 8%. Consequently, affordability continues to remain a constraint in the UK housing market. Notwithstanding this constraint, the Bank of England base interest rate, whilst increased by the Monetary Policy Committee in August by 25 basis points, continues to be low relative to the long term average and buying a house using a mortgage remains affordable.“ (Bovis Homes’ Interim Results)
Redrow reveal full year results
Redrow announced results for the twelve months to 30 June, with pre-tax profits at £120.5m, compared to £139.0m in the preceding twelve months, on turnover of £765.5m. The company completed 4,735 homes duruing its financial year, an 8.3% increase from the 4,372 homes completed in the preceding twelve months. Redrow increased its landbank by 21.4% to 21,000 plots.
Redrow Chairman Robert Jones gave a positive response to the Government’s ambition to increase industry output, while highlighting the planning system as a constraint: “The fundamentals for the industry remain sound with requirements for new homes in many regions being increased, particularly in response to the continuous formation of new households and the need to replace the Nation's ageing housing stock…. We recognise the commitment of the Government to increase the number of new homes, in particular through improving the efficiency of the planning system. The latter however continues to be the major issue in terms of meeting the Government's objectives.” (Redrow Preliminary Results Press Release)
Housing Market
House price growth accelerates according to Government statistics…
The annual rate of house price inflation rose to 6.0% in July from 5.3% in June, according to the Department of Communities and Local Government, following a non seasonally adjusted rise of 1.8% in the month. Annual price growth picked up to 7.1% in London, the second highest rate of any of the English regions after Yorkshire and Humberside (8.4%). The rate of growth rose in all the English regions except the West Midlands, which saw a small deceleration, and the South East, which saw no change. (July DCLG House Price Index)
… and RICS
The Royal Institution of Chartered Surveyors (RICS) reported that house price growth continues to accelerate. A balance of 35% of surveyors reported that prices rose in the three months to August, an increase from a balance of 30% reporting a rise in the three months to July, and the largest balance reporting a rise since May 2004. RICS also revealed that buyer enquiries increased for the fifteenth consecutive month and rose at their fastest rate since September 2003. RICS also observed that “stocks of available property were static at a near two-year low, reaffirming the strength of the market”. (RICS Website)
First-time buyer income multiples reach all-time high according to the CML…
First-time buyers (FTB) borrowed an average of 3.24 times their income in July, the highest this multiple has reached, according to the Council of Mortgage Lenders (CML). The CML also revealed that FTBs spent an average of 16.7% of their income on mortgage interest payments in July, up from 16.5% in June and just below the 16.8% in the same month of 2005. However, this is in line with levels seen over 2004 and 2005.
CML Director General Michael Coogan commented: “First-time buyers are continuing to find ways of getting a toehold on the property ladder, showing just how popular home-ownership is to many young people. But higher income multiples, coupled with higher interest payments as a proportion of income, suggests that they are continuing to stretch themselves to do so. It is essential first-time buyers, and all borrowers, look at their finances ensure they are taking sensible steps to ensure their debts are manageable, especially as the markets are expecting a further interest rate rise later this year." (CML Press Release)
… as NAEA report a rebound in first-time buyer numbers
The National Association of Estate Agents (NAEA) reported that FTBs reclaimed a greater share of the market in August, the highest share seen in a year. The NAEA also reported that asking prices stood 4.3% higher than a year ago, which “demonstrates an indication of sellers’ optimism and belief in the housing market”. (August NAEA Housing Market Survey)
Other News
CAB claim 770,000 missed a mortgage payment over the last year
Homeowners could be at risk from unmanageable debt, according to the Citizens Advice Bureau (CAB). A GfK NOP survey for the CAB revealed that 770,000 people with a mortgage had missed one or more monthly payments over the last year. The problem was more acute amongst younger home owners, with 13% of 21-24 year olds surveyed reporting that they had missed one or more mortgage payments. The survey also revealed a lack of understanding of the nature of secured lending with 11% believing a secured loan was a loan “where the borrower can miss payments and their home will always be safe”, and a further 10% thinking it “was a loan where the borrower can choose to pay back as much or as little as they like each month”. (CAB GfK NOP survey on homeownership and debt)
Construction News’ Construction Industry Scheme Conference
In April 2007, HM Revenue & Customs will be implementing significant changes to the Construction Industry Scheme (CIS). The new scheme will dispense with cards, certificates and vouchers. All contractors must use new processes for registration, verification, and recording and reporting payments. Everyone in the industry must comply with the new requirements, or face fines and penalties.
Construction News is running a Conference on CIS at the Barbican Centre in London on 26 October, chaired by Alan Nolan, Director, Tax & People Services at KPMG, this Conference will feature presentations from a variety of experts, including house builders. For more information please click here.
HBF Events
Chance to inform the DCLG’s policy direction at Housebuilding 2006
The Department for Communities and Local Government is giving developers the chance to discuss the latest housing and planning policies directly with DCLG representatives at the Housebuilding 2006 exhibition.
The DCLG has extended an open invitation to housebuilders to come onto its stand M37 on October 10 and 11, to find out more about its future policy direction and raise any concerns about current issues.
HBF Technical Conference 2006: Codes and Regs – The Way Forward
9 November 2006 - Nottingham Belfry Hotel, Nottingham
For those not attending Housebuilding 2006, the HBF Technical conference offers the opportunity to catch up on the technical issues of the moment. This parallel conference will be once again looking at the hot topics of the Code for Sustainable Homes and Building Regulations, and will address any further developments since HB06.
Current speakers are included from the following organisations: DCLG, LABC, HBF, Robust Details ltd.
For further information please contact events@hbmedia.co.uk or 020 7960 1646. To register your place on-line visit www.hbmedia.co.uk
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 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)