A weekly news summary covering all aspects of the housebuilding industry from Pierre Williams, HBF's head of media, available to members only.
Barker And The Budget
Kate Barkers long-awaited final report on housing supply has been published. The report is too lengthy and detailed for proper analysis here. But its broad thrust is very positive. It highlights what the industry has been saying for some years, accepts that the planning system is at the heart of the potential solution to the crisis of undersupply and puts forward imaginative and intelligent proposals to release land - and value from land - in order to increase development and the funding necessary to make it possible. By contrast, the Governments response is muted. The Chancellor welcomed the report but any action to implement it into policy looks likely to be delayed until after the next election. The Budget itself, as many expected - and even more hoped - was also rather dull. It reflected the governments intention to sit tight until after the General Election. There was no change in Stamp Duty despite pressure on government to raise the thresholds for first time buyers. (All media)
HBF Note: In essence, the report is excellent. But of course any report can only be as good as the action taken on it. On a positive note, public awareness of the whole issue is growing fast and there is a growing realisation that the housebuilding industry is increasingly a force for good. But as the report also made clear, more work is needed to improve quality and customer satisfaction. With 70% of the population living in owner-occupied housing and delighted at soaring house prices, along with a Government making an equal killing out of the rising market, a change of policy to truly cater for the needs of the minority dispossessed of housing is going to be a tough prospect.
The Flat Builders Federation
Housebuilders have responded to PPG3 at an unprecedented rate according to the latest housebuilding statistics. In 1997, when Labour came to power, 47% of new homes built in the South East were detached and just 14% flats. By last year, this had completely reversed with flats making up 46% and detached just 19%. This trend is emulated to a slightly lesser extent across the whole country. Redrow CEO Paul Pedley said the move showed the value the market placed on an urban lifestyle, while Crest CEO John Callcutt, said big improvements in quality and design had played a major part. Martin Donohue, Westbury CEO, said: The industry has bitten the bullet and got on with it. The era of confrontation is over. Pierre Williams for HBF, warning that this positive trend could become dangerously one-sided, said: This massive shift towards high-density living firmly puts to rest past claims that developers are profligate in their use of land (Telegraph)
Government Investigates Cabe
The government has launched an independent review of Cabe - the architecture quango funded by John Prescotts department and the Department of Culture, Media and Sport. The review will look in particular whether the organisation complies with the Nolan Committee rules of standards in public life. Its chairman is Sir Stuart Lipton, who is also the chairman and majority shareholder of Stanhope - one of the countrys leading property developers - and which has had a number of its major schemes vetted by the quango. In addition, eight out of 15 Cabe commissioners have relationships and connections of various kinds with Stanhope, while both organisations use the same City law firm. Finally, Paul Morrell, who chairs Cabes operations committee, is also senior partner of quantity surveyor firm Davis Langdon & Everest. Stanhope is a major client of this firm. Cabe said: We are scrupulously careful to ensure there is no conflict of interest in any project or debate. (Independent)
Sector Share Price Surge
Shares in housebuilders jumped on the back of the encouraging Barker report. The promise of an increase in activity if the call for more housebuilding is heeded, gave all major housebuilders a boost. Barratt jumped 22.75p to 571p; Bellway was up 41p to 790p, Crest 10.5p to 349.25p; Persimmon 36p to 668p and Wimpey 32p to 430p. Analysts are hopeful that increased housing supply will deliver the much hoped for market stability and consequent re-rating of the entire sector. The average share price rise across the sector was 4%. (All media)
Livingstone Joins the Fray
Ken Livingstone has threatened to crush opposition to his plans to build 120,000 homes around London. The Mayor has promised to fight the real outbreak of nimbyism by councils resisting his plans after complaining that four building projects had been paralysed by objections from two councils. (Guardian)
New Price Surge
The latest survey suggests prices surged by 2.9% in February - their second fastest rise since May 2002. The Rightmove index now puts annual price rises at 11.9%, up from 10% the previous month and average prices now at 179,570. A spokesman said: Prices are storming ahead on the back of renewed buyer interest and a scarcity of homes on the market. (BBC)
Buyers Shun Long-Term Fix
The Government wants them but buyers dont. Thats the message coming from the mortgage industry on the back of the Miles report on housing finance. The Chancellor was hoping long-term fixed rates would play a major role in achieving housing market stability by protecting buyers from interest rate volatility. But lenders have reported overwhelming indifference from their customers, suggesting borrowers are only interested in what their mortgage will cost next month, not in 10 years time. To illustrate the point, Halifaxs 10-year fixed rate has only 300 borrowers out of a total of 2.5m. But Miles has countered, arguing that introductory low-rate deals are unfair to existing borrowers. (All media)
Brown Fleeces Homebuyers
As if more proof was needed, a CML report says British homebuyers are paying more than twice as much tax on their homes as the European average. Property taxes in this country equal more than 4.3% of GDP. The Conservatives said: These shocking figures show how heavily Gordon Brown has hit homebuyers. Its as if Labour dont believe in home ownership. (Telegraph)
Westbury Teams up With BoS
Westbury has teamed up with the Bank of Scotland in a 150m joint venture in luxury flat developments and land trades. The 50:50 venture is the largest deal the bank has signed up with a listed UK housebuilder. The partnership will operate for an initial five-year term. Saying the joint venture gave his company the scope to engage in a level of trading its balance sheet could not otherwise afford, Westbury CEO Martin Donohue, said: We had been able to participate in some big land deals but we had also been passing up on a lot of opportunities. This deal will mean we no longer have to stand on the sidelines. (Times)
McCarthy & Stone Looking Good
McCarthy & Stone has issued a robust trading update of its half-year results to the end of February that exceeded earlier expectations. Sales targets of 780 units were comfortably beaten with 831 on an average selling price 15% up to 141,700. The market was strong in the North, Midlands and South but tougher in London and the South East.
Cant Afford A Mortgage? Theres Room at The Inn!
The Travelodge motel chain is doing its bit to ease the fears of aspiring first time buyers. With rooms at just 25 a night, the chain says living at a Travelodge is cheaper than buying a home. The total monthly bills would be about 750 a month - less than the cost of servicing a 180,000 mortgage. And with a selection of homes throughout the country, all with excellent transport links, what could be better? (Times)