A weekly news summary covering all aspects of the housebuilding industry from Pierre Williams, HBF's head of media, available to members only.
Panic Subsides as Prices Slow…
The pace of house price growth slowed last month, increasing hopes still further that the market will stave off a crash. According to the latest Rics figures, 64% of its members reported prices rising in April whilst 31% reported falls and 5% said prices were unchanged. Rics also reported the number of prospective new buyers was static for the second successive month and the number of sellers also virtually unchanged. This provides extra evidence that the long anticipated and hoped for slowdown in the market may have started. However, the National Association of Estate Agents disagrees that the boom is slowing down and says prices increased by 2.93% in April. (FT, Telegraph, the Business)
…But New Index Paints Grim Picture
A report from Oxford Economic Forecasting and Cluttons estate agency claims house prices are more likely to fall than to rise next year and estimates a 22% chance of a crash. It puts the chances of a soft landing at 40%. (Times)
Bank Debated Bigger Rate Rise
Not only did all nine members of the Bank of England’s Monetary Policy Committee vote in favour of this month’s base rate rise to 4.25% but it has also emerged that they debated a half-point rise to 4.5%. The committee was minded to think that the higher rate rise might be needed to inject the “shock therapy” intended to curb consumer spending. Publicly, the Committee considers inflation when deciding rates and inflation currently stands at just 1.2%. But in reality, house prices loom large in their thinking - as proved by the consideration of a larger rate rise. (BBC, Times, FT)
HBF Note: All the talk is about whether the suggested “shock therapy” is needed. Hopefully, if the latest Rics surveys are a good indicator of the market, pressure on the MPC for such a remedy will recede.
Rise of the Super-Nimby
Some of the country’s wealthiest individuals have formed a “green alliance” of nimbys to use their money and influence to oppose development. A 300-strong group, known as the Manuka Club, has been assembled by Ben Goldsmith - son of the late Sir Jimmy - and his brother Zac, editor of the Ecologist magazine. The group includes some billionaire socialites and even a property developer. They are strongly opposed to plans for housebuilding from Bedfordshire through the M11 corridor to Suffolk. The group has already raised £200,000 from a dinner at Claridges and wants to boost that sum to £500,000 by November. The money will be distributed to local anti-development groups. Next week it will announce which local campaigns it has already funded. (Sunday Times)
Sustainable Homes Need Stamp Duty Cut
The Sustainable buildings Task Group, chaired by the Environment Agency and English Partnerships, has called for a substantial improvement in sustainability of new development. They want tougher buildings regulations to cut energy and water consumption by 25% and said most housebuilders had not yet been persuaded of the long-term benefits of saving energy, water and recycling materials. It also called for Stamp Duty cuts to reward householders who made energy and water saving improvements to existing homes. (Telegraph)
EP Warns of Nimby Threat as Award- Winning Homes are Hailed
Middle class nimbyism is seriously threatening the Government housing plans, English Partnerships has warned. Its chairman, Margaret Ford, has also rejected the Barker Report’s claims that housebuilders are too risk-averse. What housebuilders want, she said, is certainty in the planning system and delivery on infrastructure improvements. Highlighting the award-winning Millennium Village and saying more of its kind were needed, Ms Ford said many areas were prey to a “largely middle class phenomenon where people want to benefit from living in a nice house and pleasant environment but nobody else is allowed to benefit from a similarly nice environment down the road from them.” (FT, Independent)
HBF Note: Is nimbyism justified and do housebuilders take sustainability seriously? This will be debated on BBC Radio 4’s Westminster Hour, Sunday, 10pm.
Persimmon in Excellent Shape
Persimmon has announced a 30% jump in forward sales revenue since the start of the year and has expressed its confidence of a “sustainable” housing market in the future. The company’s excellent performance means CEO John White is upbeat and looking for growth. He said: “Persimmon is in excellent shape. Trading continues to be strong and we have ample scope for further organic growth and to make acquisitions, should the right opportunities emerge.” Average selling prices are 12% up on the year to £169,000 and forward sales on units are up 17%. (Standard)
Amphibious Homes Plan
As the Dutch unveil their first amphibious housing development, the Government is being asked to consider similar schemes for flood risk areas in the UK. The Dutch scheme consists of houses built on land but which have the ability to float at times of flooding. With much of the planned housebuilding programme focused on flood risk areas in the UK, Pierre Williams for HBF said industry would keep an open mind on the idea although current policy was geared to flood defences and sustainable urban drainage systems. (Times)
HBF Note: Worth watching this, given that the Association of British Insurers and CML seem interested. Also, considering policy is for high-density development, such a method might work for detached houses but would it be suitable for flats?
Housebuilders Open Door to Investors
Investors who put money in housebuilder stocks 18 months ago would have seen a 50% increase on their investment and in many cases would have seen a doubling of their money. Takeover speculation should see further growth and McCarthy & Stone, Redrow and Ben Bailey are singled out as good opportunities. However, despite good prospects, investors continue to tread warily with Taylor Woodrow having to slightly sweeten the terms of a £200m bond issue offering them at 98.966% of face value. (Express, FT)