A weekly news summary covering all aspects of the housebuilding industry from Pierre Williams, HBF's head of media, available to members only.
The Boom Continues
Figures from the Nationwide suggest the housing market shows no sign of weakening. The lender said prices rose 1.9% in May and 2.1% in April. This brings annual house price inflation to 19.5% - the highest level since May last year. Although the building society expects the market to cool later in the year, it believes its earlier 15% forecast for 2004 might now be too conservative. (BBC)
Economic Growth Stalls but Rates Still Expected to Rise
Economic growth for the first quarter is lower than had been forecast but most economists still believe interest rates will continue their upward trend. Although GDP grew 0.6% during the first three months, household expenditure rose 0.9% over the same period. The forecast is therefore set for a further quarter-point rise in rates to 4.5% when the Bank of Englands Monetary Policy Committee meets again in early June. (All media)
CML Refutes Media Claim of Interest Rates Doubling
Widespread media reports earlier in the week said the Council of Mortgage Lenders claimed that interest rates would have to double to prevent a housing market crash. However, CML has strongly refuted these claims, saying that statements in a report it issued on the housing market had been taken out of context. The Bank of England also moved to crush the speculation, saying a doubling of rates would be quite extraordinary. (All media)
Public Accepts Need for New Homes
Nearly three-quarters of the public now accept more housebuilding is needed - but not in their backyard. A poll carried out for HBF revealed 72% agreed more homes are needed but that 48% would object to development in their street. Although the poll clearly demonstrates the success of HBFs message, it also reveals that nimbyism is alive and well. It also suggests that government could face a struggle to fulfil its housebuilding ambitions. Rob Ashmead, HBF CEO, said: The public clearly recognises that we face a serious housing problem. All too often the debate about housebuilding is dominated by a group of vocal well-organised nimbys. This poll shows how unrepresentative they can be. (FT, Express, Standard, BBC, Guardian)
North Starts to Bridge Price Gap
House prices in parts of the North have increased so much that the price of some homes have started to match their equivalents in parts of London. Figures from the Land Registry confirm that the countrys housing markets are undergoing a fundamental change with England metaphorically being turned on its head - the market stagnating in the south and booming in the north. Richard Donnell of FPDSavills said: Its almost like a big wave has moved out of the capital and picked up speed. Some really desirable hotspots in the north are on a par with the south. (Guardian)
Tory Plan to Help FTBs
The Conservatives are proposing a shared-equity initiative to help first time buyers if they should come to power. Their proposals would allow FTBs to pay only a half or two-thirds of the cost of their purchase. The remaining share would be owned by either their mortgage lender or housebuilder. The buyers would then be able to buy remaining shares in their homes as time and earnings allowed. The Tories say mortgage companies are keen to stimulate the bottom of the market to prevent a crash. However, they are strongly opposed to Labours plans to increase housing supply. (BBC, Telegraph)
HBF Note: There has been plenty of doubt about the possible success of this initiative without a corresponding increase in supply. Whilst being questioned on this by a sceptical Jeremy Paxman on BBCs Newsnight, shadow housing spokesman John Hayes said both mortgage lenders and housebuilders had responded encouragingly to the idea. However, whilst this proposal might have some merit and possibilities, its difficult to see how housebuilders can take a positive view if they are not permitted to build the homes needed to put such a scheme into operation in the first place.
Homes as Pensions Disaster
Homeowners relying on their property as a pension could be heading for disaster an independent think-tank has warned. Despite soaring prices most peoples homes will at best be a complement to occupational or personal pensions says the Pensions Policy Institute. It added that only 2% of people in working age own more than one property and equity-release schemes are very unlikely to produce sufficient retirement income. (FT, Express)
HBF Note: All this may be true but with nearly every other investment sector delivering poor returns, it hasnt stopped an increasing number of people viewing property as their best bet. The government is worried because the switch of personal investment from industry to property is seriously damaging economic growth.
Investors Pick up 13% McCarthy & Stone Stake
A group of Institutional investors has picked up the 13% stake in McCarthy & Stone that co-founder John McCarthy has disposed of. None of the new investors is believed to have a holding of more than 3%. This means the countrys largest retirement housebuilder is now without a dominant shareholder and this has provided the board with welcome relief from the possibility of a trade buyer takeover bid. (FT)
Flatbuilding: Questions Remain
The question of whether the swing away from detached houses to flats has gone too far, remains. Following HBFs announcement two months ago that the building of detached houses has halved in six years while flatbuilding has doubled, FPD Savills believes a hard look at planning is needed to see whether what is being built now will fulfil the UKs future housing need. This cements HBFs argument that whilst housebuilders have responded to an unprecedented level to PPG3, sustainable communities need to cater for families - and families need houses. (Independent)