A weekly news summary covering all aspects of the housebuilding industry. Available to members only.
Economic News
Inflation rises above target…
The Bank of England’s target measure of inflation, the Consumer Prices Index (CPI), rose above the centre of the target range (2.0%, +/- 1.0%) to 2.2% in May, up from 2.0% in April. The CPI had also edged above target in the third quarter of 2005, before falling back by the turn of the year. Household bills were the most significant factor behind the rise in inflation, with gas and electricity bills increasing significantly as several major suppliers phased in higher tariffs.
The Retail Prices Index (RPI) also showed a rise in inflation, jumping from 2.6% in April to 3.0% in May. The former target measure, RPIX (which excludes mortgage interest payments from the RPI), rose from 2.4% to 2.9%. This compares to a former target range of 2.5%, +/- 1.0%. (CPI Statistical Release)
… as unemployment hits a 6 year high..
The ILO measure of unemployment rose to 5.3% in the three months to April, up from 5.0% in the preceding three months. This is the highest rate of unemployment since the third quarter of 2000. The claimant-count measure of unemployment rose by 5,800 in May the fourteenth rise of the last fifteen months.
Headline average earnings growth for the whole economy rose to 4.4% in the three months to April, a figure that has risen steadily from a recent low of 3.4% in the three months to last November. Once bonuses are excluded from the calculations, earnings growth was stable at 3.8%. This measure has drifted slightly lower from just over 4.0% at the beginning of 2005. (June Labour Market Statistics)
… while retail sales volumes pick up
The volume of retail sales rose by a seasonally adjusted 0.5% between April and May, to stand 4.0% higher than a year ago. Taking the three months to May to iron out some of the monthly volatility, sales volumes were 3.2% higher than a year ago, the fastest rate of annual growth in over a year. (May Retail Sales Release)
Political News
Proposed regulations for HIPs published…
The Government has published revised proposed regulations on the introduction of Home Information Packs (HIPs), which are due to go live from 1 June 2007. Compulsory items in the Home Condition Report (for complete homes) will include Energy Performance Certificates, which will evaluate the energy performance of the property, a new homes warranty and a report on an incomplete property (for incomplete homes).
Housing Minister Yvette Cooper said: “For too many people, buying or selling their home is still a real nightmare, with long delays and duplication. People should be entitled to proper information at the beginning of the process. We know there are still vested interests who make money out of the current system and who are opposed to reform, but this is about getting a better deal for the consumer.” (DCLG Press Release, Link to HIP Regulations)
HBF Comment: The roll out of HIPs in regional trials this autumn remains key. HBF will continue to press for proper assessment of the trials so that issues arising can be picked up with Government.
… together with further details on Energy Performance Statistics…
The Government also announced that Energy Performance Certificates (EPC) will rate homes in categories in a similar way to those that used for fridges. The certificates will rank homes from A to G on energy efficiency and carbon emissions and will inform buyers and sellers of average costs for heating, hot water and lighting. The legislation will come into effect two years before it becomes a European requirement in 2009. The reports will include advice from inspectors on which measures, such as loft insulation or solar panels, could cut carbon emissions and improve the rating. (DCLG Press Release)
HBF Comment: Following an enquiry to the HBF, the Financial Times commented that the “housebuilding industry welcomed the rating system, suggesting that they would make new properties look relatively attractive.”
In a press release John Slaughter, Director of External Affairs at the HBF, said: "Home builders have been working hard to improve the energy efficiency of new homes. Under the latest revision of building regulations, new homes will be 40% more energy efficient than those built five years ago, and they are as much as six times more energy efficient than their Victorian and Edwardian counterparts.” (HBF Press Release)
HBF was asked to comment on the new Certificates and new homes on both BBC News 24 and Sky News.
…while the NAEA continues to object to the packs
The National Association of Estate Agents continued to object to the introduction of HIPs. Chief Executive Peter Bolton King commented: “We remain bitterly disappointed that the government has not paid heed to our warning about the impact a delay in marketing will have on the housing market and the economy as a whole. We remain gravely concerned that due to the amount of information required for leasehold properties, few will be able to be marketed before the 14 day period is up.” (NAEA Press Release)
Select Committee to publish report on housing supply and affordability
The Common’s Select Committee on Housing, Planning, Local Government and the Regions will publish its third report on “Affordability and the Supply of Housing” on Tuesday 20 June. (Press Notification)
HBF Comment: HBF gave oral evidence to this inquiry and will be issuing a press statement on the report’s findings and seeking suitable media coverage for our position.
Government to take lead on carbon emissions
The Government will make its office estate in the UK “carbon neutral” by 2012, and reduce total emissions from buildings by 30%. These measures are expected to save approximately 800,000 tonnes of carbon annually. The Prime Minister commented: “The Government spends £150bn a year on goods and services. Changing the way we spend this money, so it helps prevent climate change and protects our environment, could have a huge impact.” (No 10 Press Release)
Corporate News
Barratt acquire Guildford-based builder
Barratt Developments announced that it has acquired Guildford based developer Squire Bridge Limited, for a total consideration in excess of £25m. Barratt described the core assets of Squire Bridge as “four development sites which are in excellent locations in the Hampshire and West Sussex areas together with some completed developments”. The proposed developments are expected to provide over 250 low-rise, traditionally built homes.
David Pretty, Group Chief Executive commented: “This acquisition provides Barratt with four excellent sites, two of which already have detailed planning consents and so we can quickly commence building. There is also an added benefit in that the Four Marks site also adds to an adjacent site where our Southampton Division already has existing options”. (Barratt's Corporate Press Releases)
Bidding war for McCarthy and Stone
The Times reported on 12 June that a bidding war had broken out for the country’s biggest builder of retirement homes, McCarthy and Stone. Augusta Capital, an investment firm, was reported to be hoping to push aside private equity group Permira, with a £1 bn offer. (The Times)
Housing Market
RICS report that price growth accelerates…
The Royal Institution for Chartered Surveyors (RICS) reported a further acceleration in price growth in its May Housing Market Survey. A net balance of +20% of estate agents reported that house prices had risen in the three months to May, an increase from a balance of +15% reporting a rise in April’s survey and the seventh consecutive rise. Price rises were “most evident for 2-3 bed houses with that for flats rising at a moderate pace”. The strongest rises were seen in London and Scotland.
Interest from potential buyers continues to rise. A net balance of +22% of estate agents reported that enquiries from new buyers rose in May, the strongest increase since September 2003 other than an identical reading last October following the August interest rate cut. The volume of property coming onto the market also rose in May, with a net +18% of estate agents reporting a rise in new instructions to sell, the strongest reading since April last year. (RICS Website)
… while official figures also show a pick up
The Department for Communities and Local Government revealed that house prices rose by 1.0% in April, to stand 5.1% higher than a year earlier. This was the fastest rate of annual increase since May 2005. The DCLG revealed that annual house price growth picked up quite sharply in London to 7.1%, up from 4.0% in March. The south of the country as a whole saw an acceleration in prices with the Eastern region witnessing a rise from 0.5% to 3.2%, the South East from 0.6% to 2.8% and the South West from 1.7% to 3.7%. (DCLG April House Price Index)
Other News
Fixed rate mortgages gaining in popularity
Fixed rate mortgages accounted for 71% of all loans for house purchase in April, according to the Council of Mortgage Lenders (CML). This is a 2% increase from March and 17% higher than the same month a year ago. The CML also revealed that loans to first-time buyers (FTB) accounted for 37% of all loans in the month, while the average loan size for FTBs is now £106,400. (CML Press Release)
Innovate for Homes
Ten products were reviewed by the HBF and CPA and five were presented to the Housebuilder Panel on 2 June 2006 for the Innovate for Homes initiative. The Panel agreed to write to the companies with their comments and suggestions for future promotion. Details will be on the website shortly. (http://www.hbf.co.uk/?id=1516)
The closing date for the second round is 22 September 2006 and applications are particularly sought in the area of renewables, low energy lighting and water conservation, but all ideas are welcome.
Consultation/Key Publication Dates
Code for Sustainable Homes Implementation Autumn
Home Information Packs (HIPs) Regulations Revised regulations published 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 Graduates Conference 12 July
For a full list of HBF events please visit HBF Events and Meetings.
For details of HB Media events click here.
Paul Samter
Senior Analyst - Economic and Policy Affairs
Home Builders Federation
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