A weekly news summary covering all aspects of the housebuilding industry. Available to members only.
HBF News
HBF gives evidence to Select Committee on PGS
HBF appeared before the Department for Communities and Local Government Select Committee to give evidence to its inquiry into the government’s plans to introduce a Planning-gain Supplement (PGS). HBF Executive Chairman Stewart Baseley told the Committee that the current Section 106 agreement system was not fundamentally flawed but had gone beyond its original remit. The key requirement was to promote land supply while providing the infrastructure that both communities and developers need.
Mr Baseley pointed out that there need to be assurances from government that PGS revenues will go back to local authorities and unless transitional arrangement were put in place there would be a greater burden on developers, providing disincentives for land supply and development. On affordable housing, HBF pointed out that it is interested in a wider debate to determine the most efficient way to provide affordable solutions for rent and ownership.
HBF Annual Review 2005
The Annual Review and Accounts detailing HBF activity over the last twelve months is now available to view on the website.
Economic News
Splits appear on the MPC
The minutes of the Bank of England’s Monetary Policy Committee on 3/4 May showed a three-way split on the Committee and heightened speculation that the next move in interest rates could be an increase. At his last meeting Stephen Nickell once again voted for a cut, six members voted for no change, but David Walton voted for a 25 basis point increase in the repo rate. This was the first time in six months that Mr Nickell was not the sole dissenting voice. (Minutes of 3/4 May MPC Meeting)
Inflation edges back to target
The Consumer Prices Index, the Bank of England’s target rate of inflation, showed annual price growth of 2.0% in April, up from 1.8% in March, hitting the centre of the target level of 2.0%, +/- 1.0%. The rise was largely due to an increase in air fares compared to a fall in the same period a year earlier, reflecting the differing timing of Easter, a rise in gas and electricity bills and an increase in vegetable prices.
The Retail Prices Index (RPI) rose from 2.4% to 2.6%, while the former target measure RPIX (which excludes mortgage interest payments from the RPI) increased from 2.1% to 2.4%. (April Consumer Prices Index)
Unemployment continues to rise
The ILO measure of unemployment edged up to 5.2% in the first quarter of 2006, a slight increase from 5.1% in the fourth quarter of last year but considerably higher than the 4.7% in the third quarter. The claimant-count measure of unemployment rose by 7,700 in April, although this rate of unemployment remained unchanged at 3.0%.
Average earnings rose by 4.2% in the three months to March, compared to the first quarter of 2005, a figure that has edged up gradually from a recent low of 3.4% in the three months to last November. With earnings growth in private services outstripping other sectors of the economy, it is likely that large City bonuses are boosting the headline figure.
Once bonuses are excluded from the calculations earnings growth was 3.8%, a rate that has remained remarkably stable over the last six months and a little lower than the 4.1% registered a year earlier. (Labour Market Statistics)
Retail Sales continue to recover
The volume of retail sales rose by a seasonally adjusted 0.6% between March and April, to stand 3.0% higher than a year ago, according to the Office for National Statistics. Taking the three months to April, sales were up by 2.5% in comparison to the same period a year earlier, a figure that has remained broadly stable in 2006, and a considerable improvement from annual growth of around 1% during much of the second half of 2005. (Retail Sales Release)
Political News
Sub Committee questions Minister on PGS
Appearing before the Select Committee looking into the proposed Planning-gain Supplement, Housing and Planning Minister Yvette Cooper outlined some of the government’s thinking on the issue. The Minister said that Local Authorities should be able to use local funds raised in their area for local infrastructure, but no mechanisms or timings had been drawn up for Local Authorities to apply for infrastructure funding from the Treasury. The Minister believes that discounts for homes complying with the Code for Sustainable Buildings is an “interesting idea” but would entail practical difficulties.
The Minister said that only around half of the money raised through the planning system for Affordable Housing has been delivered in recent years. No guarantee was given on the amount of money which will be raised for Affordable Housing under PGS, but she said it would be “reasonable to assume” that funding levels will not drop below the current level. (Portland)
Minister proposes simplified building regulations…
In a speech to the Green Alliance on Wednesday 17 May, Yvette Cooper once again outlined the case for the need to build more homes, and pointed out that such new investment and building could deliver environmental and social benefits. Ms Cooper also hinted at continued dialogue with the industry over how to improve regulations: “We want a simpler set of building regulations, rather than the current alphabet soup, backed by a Code that signals their future direction – giving developers the transparency and predictability they have long asked for – but challenging them to find new ways to build sustainably. We have asked the house building industry to work with us on how best to achieve these aims.” (Full Text of Minister's Speech)
… and announces the second phase of the Design for Manufacture competition
Ms Cooper, along with Environment Secretary David Miliband, announced the second phase of the Design for Manufacture Competition. In her speech to the Green Alliance, Ms Cooper also said: “English Partnerships will run a second phase of the Design to Manufacture competition, building on the lessons learnt from the £60k, but this time pushing the boundaries further. Using six sites across the country we want to challenge the industry to build low cost, low carbon and zero carbon homes, this time looking at the whole developments rather than individual homes.”
PGS could fund more affordable housing and infrastructure
Two thirds of new homes are built without any contributions to affordable housing and infrastructure, according to research published by the Department for Communities and Local Government. Other finding included that 79% of retail developments do not have Section 106 agreements and 88% of major industrial or warehousing applications do not have such agreements either. Yvette Cooper commented: “We need to build far more homes and that means funding the infrastructure to support them. The research shows there should be plenty of scope to increase contributions from planning gain without hindering development. The value of land can shoot up just because of planning permission. It is only fair that local communities should also be able to benefit from that gain through more affordable housing or infrastructure.” (DCLG Press Release)
Corporate News
EP announce developers in Ashford and Camborne
English Partnerships has selected preferred developers in Cornwall and Kent for regeneration schemes. Bellway was announced as the preferred developer by EP and the South East England Development Agency for a 1.4 hectare site in Ashford, Kent, which has been earmarked for 260 homes. Midas Homes, the South West housebuilding arm of Galliford Try, has been selected by EP and CPR Regeneration (Cornwall’s urban regeneration company) as the preferred developer on a 17 acre former industrial site with provision for 390 homes, in the Dolcoath area of Camborne in Cornwall. (EP Press Release, Galliford Try Press Release)
Housing Market
House prices rise according to Rightmove..
Rightmove reported that prices rose by 2.0% in the four weeks to 6 May, to stand 5.9% higher than a year ago. Rightmove raised their forecast for house price growth during 2006 from 5% to 8%. Commercial Director Miles Shipside explained that “the supply and mix of new housing are failing to keep pace with demand in many parts of the country, pushing up prices”. (Rightmove's May House Price Index)
... RICS…
The Royal Institution of Chartered Surveyors reported that house prices rose for the sixth consecutive month, following fifteen consecutive monthly falls. A balance of +15% of estate agents reported that prices rose in the three months to April, a similar level to both the February and March surveys, with the price of larger properties rising faster than flats. Estate agents also reported that buyer interest increased for the eleventh successive month, a record for the survey. The volume of property coming onto the market also rose in April, the fifth successive increase, although the rise was smaller than in March. (RICS Website)
… and government figures
The Department for Communities and Local Government (DCLG), formerly the Office of the Deputy Prime Minister, reported that house prices rose by an unadjusted 2.0% in March, to stand 3.3% higher than a year ago. The annual rate of price appreciation accelerated from 1.5% to 4.0% in London, as the Eastern region and South East also saw a modest acceleration, while the Northern regions saw a deceleration. (DCLG March House Price Index)
Other News
House building volumes rise
The Department for Communities and Local Government (DCLG), reported that there were 43,500 private housing starts (unadjusted) in England in the first quarter of 2006, a 17.6% increase from the first quarter of 2005. Seasonally adjusted, this was the highest number of private starts in one quarter since 2000, which is when the first adjusted data is available for.
Regionally, the increase in private starts was spread across England in the first quarter. Only the West Midlands saw a decline in starts in the first quarter compared to the same period a year ago. The sharpest increase in building rates over recent quarters has been in the South West. (DCLG 1st Quarter House Building Statistics)
Rural communities need 11,000 new affordable homes per year
There should be an additional 11,000 affordable homes provided each year in rural areas (settlements of less than 10,000) and the Housing Corporation should increase funding directed to rural areas, according to the Affordable Rural Housing Commission (ARHC), which was set up by the government to look into the “scale, nature and implications of the shortage of affordable housing for rural communities in England”. This is the equivalent of six extra houses per year in each rural ward.
The report highlights the problem faced by around 45% of prospective newly-forming households in rural areas in affording a home where they currently live. As well as recommending the increase in funding from the Housing Corporation, the ARHC makes several recommendations, including that the government identifies ways to re-classify some agricultural buildings as brownfield land, both new and existing rented and shared ownership stock remains available to meet continuing local need and that rural areas should share in housing growth planned following the government’s response to the Barker Review.
Elinor Goodman, chair of the Affordable Rural Housing Commission, said: “Our investigation has shown us that much good work is already being done. We’ve seen how affordable housing can improve the overall quality of a village and underpin its future. But, to meet the scale of housing need in rural communities in all regions, we recommend that 11,000 affordable homes need to be built – that’s equivalent to around six new houses a year in each rural ward in England.” (ARHC Report Executive Summary)
In response to the AHRC finding, HBF Executive Chairman Stewart Baseley commented: “The Commission Report clearly highlights the affordability crisis in rural England and the impact this is having on communities in the countryside. The report shows that between 1998 and 2005, new housing completions actually declined by 6 per cent - at a time when demand has been growing significantly. We therefore welcome recommendations to increase supply by bringing more flexibility into the planning process. Home builders are doing much to meet the market need for more affordable homes, developing a wide range of more affordable housing options. Home builders also recognise the need for more non-market affordable housing, particularly in rural areas, and are keen to work with local authorities to find the most effective and appropriate solutions. Rural communities will only thrive when there are a full range of methods to address the affordability problem and these match peoples' housing aspirations.”
Developers to have their own fun run
As part of the 5km Land Aid Fun Run to be held on the evening of Wednesday 14 June, there will be a Developer Trophy (sponsored by Try Homes Southern Region) up for grabs. Land Aid is the charity of the UK property sector from whom its support is drawn. It is run by a Board of Trustees from within the industry and is celebrating its twenty first anniversary in 2006. For further information visit http://www.landaid.org/
Consultation/Key Publication Dates
Code for Sustainable Homes Implementation Autumn
Home Information Packs (HIPs) Consultation Closed 31 December
HIPs Dry Run Timeline published 16 Mar
HIPs Introduction 1 June 2007
Housing and Regeneration Consultation Closes 19 May
For all full list of HBF events please visit the HB Media website click here
Paul Samter
Senior Analyst - Economic and Policy Affairs
Home Builders Federation
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