A weekly news summary covering all aspects of the housebuilding industry. Available to members only.
HBF News and Activity
HBF Barker Conference Filling Up
Places are rapidly filling up following the announcement that David Miliband will address HBF’s major Barker Conference in London on 23rd February (9.30-16.00). An early booking is recommended to avoid missing out. Other speakers will include Kate Barker, Professor Sir Peter Hall and James Paton, HM Treasury.
To book a place please click here or contact the Events team on 020 7960 1646 or email
Economic News
MPC members becoming more dovish?
Monetary Policy Committee (MPC) member Kate Barker hinted that she has become a little more dovish on interest rates in an interview with the Guardian. She had become a little less confident about the forecasts made in November’s Inflation Report, and commented: “You’re starting from a position where to keep inflation on track in the longer term you do need to have growth pick up”. While Ms Barker has voted for no change in rates in recent MPC meetings she said: “there are question marks about whether the pace of growth is going to prove strong enough, and this is the question for the February forecast round”. (Guardian)
Another MPC member Stephen Nickell, who has been the sole dissenting voice on the Committee of late, voting for a cut in December and January, gave an unequivocal view favouring lower rates in a speech on “Monetary Policy, Demand and Inflation”. Mr Nickell highlighted a degree of spare capacity in the economy at present, “some period of above trend growth, which will reduce the extent of spare capacity, is consistent with hitting the inflation target in the longer term”. Mr Nickell concluded “that inflation is more likely than not to come in below target for some time, once the oil price effect washes out. In order to get inflation up towards target further out, a cut in interest rates was required.” (Stephen Nickell's Speech)
HBF Comment: The February MPC decision will be announced on the 9th and is likely to be guided by projections made in the MPC’s Inflation Report, which will be published on the 15th.
Christmas revival in spending proves short lived
The rise in retail spending over the Christmas period proved to be short lived, according to the Confederation of British Industry’s (CBI) Distributive Trades Survey (DTS). A balance of 11% of those surveyed reported that sales volumes in the first two weeks of January were lower than in the same period a year earlier, although expectations for February are the best for eight months.
Executive Director of Asda and Chairman of the CBI's DTS Panel John Longworth commented: "As retailers had feared the spending surge seen in December was short-lived and not sustained into the New Year. However, sales in January were the least negative for eight months, with the exception of Christmas. Looking ahead, expectations for growth are the strongest since May but sales remain heavily dependent on price discounts and promotions." (DTS Press Release )
Greenspan to be honorary advisor to the Chancellor
Dr Alan Greenspan KBE, who retired as Chairman of the US Federal Reverse this week, agreed to become an Honorary Advisor to Chancellor Gordon Brown on issues relating to global economic change. The Chancellor commented: ““I am delighted that Dr Greenspan has agreed to be Honorary Adviser. His advice on issues relating to global economic change will be much appreciated.” (HMT Press Release )
Political News
Select Committee to conduct inquiry in PGS proposals
The Office of the Deputy Prime Minister’s Housing, Planning, Local Government and the Regions Select Committee is to conduct an inquiry into the government’s proposals to introduce a Planning-gain Supplement. The Select Committee will look specifically at factors that will be taken into account when determining the rate at which the supplement is set, how the PGS should be used in relation to social housing, how the revenue should be distributed, how and if the PGS should be used to encourage brownfield development and the potential impact on Section 106 agreements. Evidence to the Committee should be submitted by 27 February. (Select Committee)
CML unhappy with HIPs
The Council of Mortgage Lenders (CML) expressed “serious concern” over the Government’s proposed Home Information Packs (HIPs), which are scheduled to “go live” on 1 June 2007. The CML pointed out that the Government has still not published a detailed timetable and that the Home Condition Report (HCR) will not remove the need for lenders to conduct valuations. The CML also called on the government to consider the potential impact of HIPs on the market and said: “We are disappointed that as yet the Government has done little to simulate the potential impact of HIPs, and we urge them to do so urgently.”
CML Director General Michael Coogan said: “"With only 16 months to go, there is still a huge amount of work to do to make HIPs a reality. The Government must urgently publish a detailed timetable of action, so that the market and consumers can know what to expect and when. The Government must also work to dispel the myth that the HCR element of the pack will stop the need for lender valuations. This is simply incorrect and sends out a confusing message to consumers.”
"Finally, it is vital that government addresses the potential consequences the implementation of HIPs might have. HIPs represent a huge change in the process of buying and selling a house and will undoubtedly impact upon the market - possibly in unintentional ways. The Government must examine what impact the packs will have so that all stakeholders can be prepared for their onset." (CML Press Release)
Housing Market
House Prices begin 2006 on the up
House prices rose by a seasonally adjusted 1.4% in January, according to Nationwide, to stand 4.4% higher than a year ago. This was the largest monthly rise since July 2004. Nationwide reported that three-quarters of the 4.4% annual rise came over the last four months.
Group Economist Fionnuala Earley commented: “We think that at least part of the pick up in the market since October reflects a release of some pent-up demand following the cut in interest rates in August and the increased confidence on the part of buyers and sellers as they became more comfortable that the market was heading for a soft landing.” However, Nationwide do not expect the market to “take off”, with economic growth expected to remain below trend in 2006 and affordability remaining stretched. (Nationwide January House Price Release)
Mortgage approvals continue to surge
The number of loans approved for house purchase surged to a seasonally adjusted 122,000 in December, the highest level since May 2004 and only 10,000 below the peak seen in 2003, according to the Bank of England. Approvals for 2005 as a whole were 4.4% lower than in 2004, but the last quarter was up 41.1% on the final quarter of 2004. The number of approvals fell away sharply over the latter part of 2004 as the housing market boom ran out of steam, but increased steadily throughout 2005 and December’s figure was the highest seen outside of the highs hit from 2002 to 2004. (Bank of England's Statistical Release)
First-time buyers have to save for nearly twice as long as 5 years ago
First time buyers now have to save, on average, for five years to get on the property ladder, compared to three years five years ago and just two years a decade ago, according to research produced by Halifax. The research also revealed that there were an estimated 320,000 first-time buyers in 2005, the lowest number since 1980. Unsurprisingly, London and the South East were found to be the least affordable areas. (Halifax's FTB Research)
Mortgage payment problems rise
Figures from both the Council of Mortgage Lenders (CML) and Department of Constitutional Affairs (DCA) show an increase in the number of people with mortgage payment problems. The CML reported that the number of properties taken into possession by mortgage lenders rose to 5,630 in the second half of 2005, up 22% from the first half of the year.
2005 as a whole saw 10,250 repossessions, 70% more than 2004, although this was still the third lowest annual figure since 1983. The number of mortgages in 3 to 6 months of arrears was up 3% from the first half, 6-12 month arrears were up 10% and mortgages in arrears by more than 12 months rose by 10%. The CML is forecasting 12,000 possessions in both 2006 and 2007. (CML Press Release)
The DCA reported that the number of mortgage possession actions entered into in the fourth quarter for 2005 was 31,018, up 50% compared to the same quarter a year earlier, while a total of 18,784 orders were made, up 58% on the fourth quarter of 2004. However, the DCA notes that “figures report how many possession proceedings have been issued, and how many orders for possession have been made by the county courts. Since many of the orders made will not have been enforced these figures do not reflect how many properties have been taken into possession.” (DCA Press Release)
Other News
Brownfield use continues to rise
As many as 72% of new homes, 68% excluding conversions, were built on previously developed land in 2004, according to an update of the Office of the Deputy Prime Minister’s “Land Use Change in England” statistics. The share of homes built on brownfield land has risen sharply in recent years from 50-56% in the mid and late 1990s, increasing in every year since 1999. The East Midlands was the only region below the government’s target of 60% of newly built homes to be on brownfield land.
The density at which new homes are built has risen even more sharply. New dwellings were built at an average density of 40 per hectare in 2004, up from 34 in 2003 and a narrow range of 24 to 25 per hectare from 1994 to 2001. The North East and Yorkshire and the Humber were the regions with the lowest density at 33 per hectare in 2004, which is higher than the density at which homes were built in any region (with the exception of London) just two years earlier. (Land Use Change Update)
Sellers may have to pay estate agent fees for website sales
Companies that let owners sell their homes online and offer a supporting service should be classified as estate agents, according to a new ruling by the Office of Fair Trading (OFT). It had been the case that sellers could avoid estate agents fees by marketing their homes online for a flat fee of around £100, even if they already have a sole agreement with an estate agent. In most cases the website would provide a sales board and a phone line to answer queries, but arrangements for viewings and negotiations were left up to vendor. However, the OFT has concluded that if sellers have a sole agency arrangement with a high street estate agent, then they should pay the agent a fee even if they were not involved in the sale as, under the new ruling, use of the website could be judged to breach the sole agency agreement. The guidance is not legally binding but agents are awaiting a test case. (Times)
Consultation/Key Publication Dates
PPS3 Consultation: 5 December - 27 February
Planning-gain Supplement (PGS) Consultation: 5 December - 27 February
Select Committee inquiry into PGS: 27 February
Code for Sustainable Homes Consultation: 5 December - 6 March
Home Information Packs (HIPs) Consultation: Closed 6 December
HIPs Dry Run: Ongoing
HIPs Introduction: 1 June 2007
Barker Review of Land Use Planning: 25 January - 28 March
Energy Review Consultation: 25 January - 14 April
Lyons Enquiry into Local Government Consultation: Closes 13 March
Final Part L Publication: 5 April
HBF/HBM/NHMB Events
Barker Conference: 23 February
New Homes Week: 20 - 26 March
For all full list of HBF events please visit the HBF website click here.
Paul Samter
Senior Analyst - Economic and Policy Affairs
Home Builders Federation
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