A weekly news summary covering all aspects of the housebuilding industry from Pierre Williams, HBF's head of media, available to members only.
Barker: Government Promises Big Response
The government is to give the go-ahead for the building of more than two million new homes in the next decade in order to address housing undersupply. John Prescott told the Observer it was time for a “step change” in house building and said planning rules would be relaxed, developers (or landowners) would have to pay windfall taxes on profits and local authorities would have to earmark new land for development, including greenfield. Admitting the figure was “one hell of a target” he said: “the most important thing is to get the numbers up”. He also blamed the planning system for being “too conservative” and said the house building industry was too obsessed with building “executive homes”. (Observer and all media)
HBF Note: Robust words but no real action yet and neither can too much be expected until after the General Election. If Mr Prescott still thinks the industry is obsessed with detached houses perhaps he needs to read last week’s Telegraph
At a House of Commons seminar this week, Kate Barker said she was very concerned that the anti-development lobby was trying to damage the credibility of her report by insisting that short-term economic conditions were the principal cause of house price rises. Already, some commentators are saying she wants to increase supply to the point of prompting price falls. This is a deliberate attempt to disguise the long-term impact of undersupply.
Big Cash Handout for “Starter Homes Initiative”
Again, on the back of the Barker Report, the Government has set upon another round of spending on its “Starter Homes Initiative” This time, £690m will be handed out in loans of £50,000 - £100,000 to those fitting the new definition of key worker - those employed in the public sector, in a front-line role delivering an essential service in a sector where there are serious recruitment and retention services. Derided as a “drop in the ocean” by most unions, the Liberal Democrats said: “The Government should use the £690m to build more affordable homes, not push prices even further out of reach of ordinary people. Subsidising even more housing demand when what we need is more houses, is truly the economics of the madhouse.” (All media)
£3.5bn Plan for Affordable Homes
Finally, the government has also unveiled a £3.5bn programme to build more than 70,000 affordable homes within the next three years. Details of where they will be built has yet to emerge but it is thought they will be concentrated in the four growth areas of the South East (FT)
Booming Barratt Calls for “Fast Planning”
Barratt Chief Executive, David Pretty, has called for action to produce a “simplified and speeded up” planning system on the back of the Barker Report. His comments came as the company announced strong half-year results to the end of 2003 with a 35% rise in pre-tax profits to £142m. The six months saw sales of 6,705 units - up 10% on the previous year - and an expectation of over 14,000 sales for the full year. The group is also delivering more than 80% of its output on brownfield. The FT comments that Barratt’s performance is all the more impressive given that the company’s growth has been organic. If Barker’s recommendations were adopted, the company’s share price would start looking “extremely cheap” (all media)
Bank “Hawk” Warns of 90s-style Debt and Crash
If interest rates rise as expected, household debt servicing will return to levels last seen at the start of the 1990s and trigger a housing crash. That’s the view of Bank of England Deputy Governor Sir Andrew Large, who is arguing for an early increase in interest rates to slow borrowing. However, other Treasury officials have played down fears of a downturn and insist the chances of a housing crash are “small”, whilst others have warned against using rapid rises in rates to induce a “shock therapy” to curb consumer borrowing. (All media)
Builders Boom on Barker and Bid Rumours
The surge in housebuilder stocks has been further fuelled by a new round of bid speculation. Rumours of a bid for Westbury by Persimmon sent Westbury up 45p to 505p whilst Persimmon gained 48p to 680p. Meanwhile Bovis climbed 65p to 595p, Barratt 58.5p to 601p and Berkeley up 88p to 1005p. Whether speculation played a part in these gains is, well, pure speculation, That’s because the whole sector has seen a boost on the back of the promise of more housebuilding in the Barker Report.
(Mail, all media)
FTBs: News Gets Grimmer
First time buyers are being forced to wait up to six years to get a foot on the housing ladder according to the latest from Bradford and Bingley. The bank said their problems were being exacerbated by a “buy now, pay later” culture that left hopeful buyers unable to make their savings catch up with prices. The report said 36% of FTBs are now over 30 and 17% over 35. The average spend for a first home is £93,925. (All media)
Housebuilders Gear Up for New Urbanism
New homes buyers want a Sex and the City lifestyle. And Britain’s housebuilders are delivering. Walk-in wardrobes, power showers, balconies, giant fridges - the aspirational new home buyer wants it all. Highlighting the shift to high-density development, Pierre Williams for HBF said design and quality has never been so important for the industry. Laing Homes Sales and Marketing Director, Paul Hogarth, said: “People like confidence in their homes and what they see on TV looks very stylish, so it gives them the confidence to copy the same look.” (Times)