A weekly news summary covering all aspects of the housebuilding industry. Available to members only.
Political News
A quarter of first-time Buyers expect parental assistance…
23% of first-time buyers (FTB) expect their parents to give or loan them money for a deposit, according to research by mortgage lender Abbey. The research also found that 12% expect parents to act as a guarantor on their mortgage and 13% expect that their parents will pay for furniture or white goods. Abbey’s Head of Mortgages Jeff Scott commented: “Many first-time buyers need a significant leg-up from parents to have a realistic chance of getting on the property ladder. It is commonplace for parents to take their children back into the family home so that they can save for a deposit, as well as helping them out with cash gifts or loans. Even when their offspring have found a place to buy, parents are still expected to help out on moving day, and with DIY and decorating.” (Abbey's Website)
… and the Conservatives blame the Government
The Conservatives blamed the Government for the difficulties faced by first-time buyers. Shadow Local Government Minister Caroline Spelman said: “This survey shows that it is now so difficult to get on the housing ladder that many young people are only able to do so with Mum and Dad's help. But the reality is a lot of young people don't have the luxury of parents who can afford to dip into their savings and stump up for a deposit. Under Labour home ownership is becoming the privilege of the few, and the barrage of increased taxes such as stamp duty, council tax and the abolition of mortgage interest relief mean it is more difficult than ever for people to buy a home of their own." (’Conservatives Press Release)
A third of homeowners are not aware of HIPs…
36% of UK homeowners confess that they do not know what Home Information Packs are, according to research carried out by npower. The survey found that only 9% considered energy efficiency as a priority when moving, despite the fact that the Energy Performance Certificates are to be a compulsory part of HIPs. Two thirds of those surveyed also admitted they had no idea of how energy efficient their homes are. (npower Press Release)
… while AHIPP claim HIPs will “mend broken property chains”
The Association of Home Information Pack Providers (AHIPP) claimed that the introduction of HIPs will help to speed up the process of getting new buyers through the process of acquiring local searches and issuing surveys in the event of a sale falling through. AHIPP are to roll out a HIP trial in six locations in November. AHIPP Director General Mike Ockenden said: “A huge number of transactions balance tentatively, their fate resting on the purchaser next in line. When someone is forced to pull out the whole chain can collapse resulting in lost money and time for buyers and sellers and estate agents. Sellers are left desperately scrabbling to get their property back on the market to achieve another sale quickly as possible. The HIP, in conjunction with the HCR will greatly help to ease this problem, with sellers able to get another buyer on board faster than ever before with timely surveys and searches already completed.” (AHIPP Website)
Commission on Integration and Cohesion launched
The Government announced the launch of a new Commission on Integration and Social Cohesion, with a remit to examine issues that raise tensions between different groups, suggest how local community and political leadership can combat perceived barriers to cohesion and integration, examine how communities can tackle extremism and develop approaches that build local areas’ capacity to prevent problems.
At the launch of the Commission, Secretary of State for Communities and Local Government Ruth Kelly said: “It is a practical exercise which will look at what actually works for communities on the ground. It will act as a catalyst for change, by ensuring that, not only do we know what works, but that we are able to share this information and “scale up” those things that really make a difference. The Commission has a new and more complex set of challenges to address. It will need to think about both people, and place. About established communities, and those that have yet to develop a resilience to change.” (Ruth Kelly's Speech)
HBF Comment: While there were no housing specific statements in the launch of the Commission, HBF will monitor the situation for any potential impact this work may have for housing issues.
Eastern European workers boost workforce
The Home Office reported that 427,000 workers from the Eastern European Accession States had registered to work in the UK since their nations joined the European Union in June 2004. (Home Office Accession Monitoring Report, May 2004 - June 2006)
HBF Comment: HBF has received a number of media enquiries as to the impact of migrant labour on the need for an increase in housing supply.
Housing Market
Asking prices fall
Asking prices fell by 1.6% in the five weeks to 12 August to stand 9.0% higher than a year ago, according to website Rightmove. A seasonal slowdown and stretched affordability were cited as the reasons behind the fall. Commercial Director of Rightmove Miles Shipside commented: “Prices have passed their peak for 2006. The record price levels seen so far this year were driven by the south of the country. With that market cooling, and the signals from the Bank of England that interest rates may move up again, sellers may have to reduce their price expectations. This welcome dose of reality is good news for buyers, especially in the south of England, where many have been priced further out of the market by the strong growth during the first half of the year.” (Rightmove August House Price Index)
Prices to end 2006 up 7% as cost of buying and owning hits two decade high
The Royal Institution of Chartered Surveyors raised their forecast and now expect house prices to end 2006 7% higher than at the start of the year. Price growth is then expected to slow somewhat to 3% in 2007. The RICS also published an accessibility index and reported that the cost of becoming a home owner and the ongoing cost of housing is at its worst in almost 20 years.
RICS Economist David Stubbs commented: “Unless house building levels improve, and levels keep pace with population growth and rising income and wealth, people will continue to find it difficult to access the housing market. If the housing market is to become more accessible, lenders must continue to offer generous funding levels, and the government should, out of necessity, promote a significant increase in the housing stock. The government must act to create more social housing and tackle the problem of nimbyism in the countryside by building affordable housing for key local workers. The financial pressures of up front buying costs and rising energy prices will continue to create a ‘have - and have not’ property society.” (RICS Press Release)
HBF Comment: HBF Executive Chairman Stewart Baseley commented on the RICS report: “Tackling the affordability of housing is an urgent task, and the RICS are right to suggest that the only practical way to address the problem is to expand the supply of housing in the UK. To this end, it is paramount that a sufficient supply of land is being brought forward through the planning system.”
“Household formation figures from the Government have shown that the number of households in England is due to rise by 23% over the next twenty years, when the rate of home building is still falling well short of current demand. If current trends are maintained, then the shortfall of homes in the same time period will be 50,000 per year. Home ownership is an aspiration shared by the overwhelming majority of the population. Without prompt action, millions are likely to see it remain just an aspiration.”
Corporate news
Strong results for Persimmon
Persimmon, the country’s largest home builder, reported that pre-tax profits in the first half of 2006 were £271.6m, up 15.6% on the same period a year earlier, on turnover of £1.5bn. The company announced that the integration of Westbury, which it purchased at the start of the year, had been completed ahead of schedule. A total of 8,226 units were completed in the first half, 38.2% more than in the first half of 2005, while completions were up 7% when the impact of the takeover is stripped out.
Group Executive Chairman John White offered an upbeat perspective on the general environment: “We have been encouraged by recent moves by the Government to improve the planning process and we welcome the decision to reconsider the necessity for full implementation of Housing Information Packs. The Bank of England’s recent decision to implement a quarter point rise in interest rates, effectively reversing last August’s cut, has had no tangible effect on our business or on visitor levels or enquiries.” (Persimmon's Interim Results)
Other News
Carbon trading plan announced
The Government announced details of its plans to reduce industry’s carbon emissions, focusing on companies responsible for high levels of emissions and widening the amount of carbon covered under the scheme. The second phase of the EU’s Emissions Trading Scheme will be expanded to cover 160 installations responsible for 9.5 million tones of carbon dioxide not covered in the first phase of the scheme. The scheme is expected to deliver a saving of 8 million tonnes of carbon per year.
Environment and Climate Change Minister Ian Pearson commented: ”Our plans for the second phase of the emissions trading scheme expands its coverage and will result in more carbon emissions being monitored. We are focusing on the biggest carbon emitters whilst removing those businesses where the costs of the scheme outweigh the environmental benefits. Emissions trading is about providing business with a cost effective way of reducing emissions. The emissions trading scheme provides business with the flexibility and a choice as to how to tackle carbon emissions. Industries can make a business decision whether to reduce emissions or to buy reductions from elsewhere.” (Defra Press Release)
OFGEM trial to improve energy efficiency for domestic customers
Energy regulator OFGEM invited firms to bid for funding to take part in trials to help gather further information on how domestic customers change energy consumption in the light of better information on energy use. OFGEM said that improved information, possibly through smart metering, could make a significant contribution to “reducing greenhouse gas emissions and tackling fuel poverty”. The regulator will evaluate bids for trials, recommend a range of trials and compile a final report after at least two years of data have been collected. A workshop will be held on 6 September and the closing date for bids for the trials is 29 September. (OFGEM Press Release)
Growth areas have potential to deliver balanced growth
The four growth areas (Thames Gateway, the Milton Keynes area, Ashford and the London-Stansted-Cambridge-Peterborough corridor) have the potential “to be a much better model for delivering growth, in social, economic and environmental terms” than previous more dispersed planning models, according to a report “Would You Live Here?” by the Institute for Public Policy Research. The report points out that current house building plans in the South of the country will fall short of the projected number of new households by 200,000 by 2016, and argues for greater affordable housing provision. The IPPR believe that “local and regional planning policies and decisions need to be informed by the new national Housing and Planning Advice Unit.” (Executive Summary)
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)