A weekly news summary covering all aspects of the housebuilding industry. Available to members only.
HBF News
Minister addresses the industry at HBF’s AGM
Housing and Planning Minister Yvette Cooper MP addressed the industry at HBF’s Annual General Meeting. The Minister congratulated the Federation on the work it has done in promoting skills and helping to modernise the industry. She noted a shift in opinion in the last twelve months, with a wide consensus across the political spectrum now accepting that there is a need to build more homes. She said the government is allocating more money for infrastructure, while it continues to favour the proposed Planning-gain Supplement as the most efficient way to provide future funding by capturing the uplift in land value through the granting of planning permission. She recognised the need to speed up the planning system.
The Minister also called on the industry to respond to the proposed increase in output and dispel doubts its business model. She said that that design is crucial. She concluded by saying there is a common interest in increasing the level of house building and it is important that people understand the price of failing to meet this.
HBF calls for more evidence to support industry’s cause
Presenting the keynote address at HBF’s AGM, Executive Chairman Stewart Baseley called on the industry to provide the Federation with evidence to back its cause: “I am convinced we need to get better at assembling the evidence and telling others about all the good things the industry is doing. I will soon be writing to all members with a short questionnaire requesting information on what your companies are doing to improve customer satisfaction. This will mark the first step in a sustained evidence-building exercise accumulating member news and information across a range of issues. I am determined that we start telling the whole story. This is a big challenge for the year ahead, and we at HBF will need your full support. If we don’t promote the industry, the benefits it brings to communities, to society, to the economy, to the environment, no one else will.”
A majority want more house building
A YouGov poll for the HBF published to coincide with the AGM revealed that 53% of those who expressed an opinion want more house building to be encouraged in their area. There is further evidence that the general public accept there is a shortage of homes in the country with 65% agreeing that Britain needs more homes and 63% thinking that a shortage of housing will be a serious problem within five years. When asked whether, on balance, the number of new homes should be increased in light of the potential impact on our towns, villages and countryside, 45% agree against 42% who do not. The survey also reveals that 52% of people described new homes built in their area in the last two years as “very good” or “fairly good” in terms of appearance, as against 24% who consider new homes as “fairly poor” or “very poor”.
Stewart Baseley commented: “This poll shows that people want more homes to be built, with most expecting their Council to be encouraging the increase in supply. I hope that the Councils elected on 4 May will take note, and lead the way to ensure that people are not denied the opportunity of a place on the property ladder.” (HBF Press Release)
The Government also welcomed the results of the poll with Housing and Planning Minister Yvette Cooper commenting: “People want to know that their sons and daughters will be able to afford a home of their own. That is why many people in our communities now recognise the need to build the new homes that the next generation needs. Unless we increase house building rates less than a third of thirty year old couples will be able to afford a home of their own in twenty years time.” (ODPM Press Release)
HBF launch Customer Code or Conduct
HBF launched a Customer Service Code of Conduct to help builders develop even higher standards of good practice in customer service. The Code was drawn up in close consultation with HBF members and the NHBC, the principal standards body for new homes in the UK. Home builders adopting the Code are urged to draw up a Customer Charter, making clear their service commitments to home buyers and living up to them. A Charter that complies with the HBF Code will commit home builders to explain to customers the standards of service, procedures and information they can expect. (HBF Press Release)
Economic News
Economy expands at trend rate
The UK economy expanded by 0.6% in the first quarter of the year, compared to the final quarter of last year, according to the preliminary estimate of Gross Domestic Product (GDP) published by the Office for National Statistics. This meant that the economy grew by 2.2% between the first quarter of 2005 and the first quarter of 2006, and the rate of expansion is currently around what is assumed to be the trend rate. While the overall figures were broadly in line with consensus forecasts, there was some surprise that the production sector reversed four consecutive quarters of shrinking output and grew by 0.7% in the first three months of the year. The rate of expansion in the services sector (which accounts for almost three quarters of the economy) slowed a little from 1.0% in the fourth quarter to 0.6% in the latest period. (Preliminary Estimate of Q1 GDP)
Retail sales recover a little in March
The volume of retail sales rose by a seasonally adjusted 0.7% between February and March. However, as this followed a first two months of the year, sales in the first quarter were down 0.7% in comparison to the preceding three months. Sales were up 1.8% in the first quarter compared to year ago, a slight slowing from recent rates but considerably stronger than annual growth rates of below 1% in the third quarter of last year. (March Retail Sales Release)
Corporate News
Profits down at McCarthy & Stone
McCarthy & Stone reported that pre-tax profits in the six months to 28 February fell by 19.9% to £39.1m, compared to the same period a year earlier, on turnover of £131.1m. The company made 753 unit sales, fewer 4.9% than a year ago, while its total stock position (finished stock, work in progress, land with planning permission and land without permission) declined by 1.4% to 10,607 units.
Keith Lovelock, Chairman, commented: “We are seeing some signs of increasing buyer confidence and although it is too early to assess how the market will develop we now believe that there is an opportunity for the Group to exceed last year's sales of 1,983 units although we expect margins to ease as the higher historic margin sites are sold out.” (McCarthy & Stone Interim Results)
Housing Market
Price growth slows in April
House prices edged up by a seasonally adjusted 0.1% in April, to stand 4.8% higher than a year ago, according to Nationwide. The annual rate of growth slowed from 5.3% in March. Nationwide were unsurprised by the cooling in prices, following a 1.1% surge in March and describe the underlying picture as “reasonably healthy as demand conditions have remained quite firm”.
Group Economist Fionnuala Earley highlighted higher oil prices feeding into inflation and thereby reducing income available more general consumption, a weakening labour market and a softening in consumer confidence as reasons that add “up to a mildly weakening, rather than accelerating, profile for house price growth for the rest of the year”. (Nationwide’s April House Price Index)
Other News
JRF calls for leadership on rural homes affordability crisis
The country needs leadership from national and local politicians to spell out the costs and consequences of ignoring the case for more rural affordable homes, according to a report by the Joseph Rowntree Foundation (JRF), “Homes for Rural Communities”. The report notes that house building levels are falling in rural areas, down 4% from 2003-5, compared with a 19% increase in urban areas.
The report highlights the process where younger households on lower incomes are being squeezed of some areas, which “spells the death of many rural communities that have served all income groups in the past”. The report concludes that “those responsible for planning decisions and for the allocation of resources need to speak for the younger and less affluent households who are priced out of rural areas”. (Homes for Rural Communities Report)
HBF Executive Chairman Stewart Baseley commented in a press release responding to the JRF report: “While the rate of house building is indeed increasing in urban areas, the requirements of rural areas are not being met. As the Foundation recognises, we need to find ways of bringing more land forward for development to meet rural areas’ needs. Only by improving supply for these areas can we facilitate the full range of housing solutions their communities need.” (HBF Press Release)
Parents pulling out all the stops to help next generation get on the housing ladder
As many as 42% of first-time buyers are receiving help from their parents to get on the property ladder, while 43% have considered giving up altogether, according the Bradford & Bingley’s First Time Buyer Report. Of those receiving help, 50% are given the deposit by their parents, nearly double the number giving or loaning their off-spring a deposit just a year ago.
Bradford & Bingley’s mortgage development officer Duncan Pownall commented: “The message we are getting from our Report’s findings is that many first timers are prepared to compromise, work hard to save for a deposit and look to their families for extra help if needs be. As house prices continue to rise families are having to help more to get the next generation on the property ladder.” (Bradford & Bingley Press Release)
Supermarket to sell homes
Supermarket ASDA is to trial a discount internet based estate agent service across ten stores in the North East, which will be rolled out nationally if successful. The agency is to be called Homes@Supermarkets and aims to cut standard agent selling commissions by up to 50%. It also intends to provide vendors with Home Information Packs, which will be compulsory from July 2007 and are estimated to cost £600-1000, free of charge. The Financial Times (28 April) reported that Tesco are expected to run a similar trial later this year. (FT, Times, Guardian)
Consultation/Key Publication Dates
Code for Sustainable Homes Consultation 5 December - 6 March
Implementation To be advised
Home Information Packs (HIPs) Consultation Closed 31 December
HIPs Dry Run Timeline published 16 Mar
HIPs Introduction 1 June 2007
Barker Review of Land Use Planning 25 January - 28 March
Energy Review Consultation 25 January - 14 April
Part L Implementation date 6 April
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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