A weekly news summary covering all aspects of the housebuilding industry. Available to members only.
HBF Economic News
Interest rates left unchanged
The Bank of England’s Monetary Policy Committee (MPC) left the repo rate unchanged at 4.50% at its meeting this week. The decision had been widely anticipated by market commentators, although there has been some shift in sentiment towards the next move in rates being an increase, with the financial markets pricing in a rise towards the end of this year. (MPC Decision Press Release)
Signs of life on the high street
There were modest signs of an improvement in conditions for high street retailers in April from the Confederation of British Industry’s (CBI) Distributive Trades Survey (DTS), with a balance of 2% of survey respondents reporting that sales volumes were up in comparison to last year. This was the first positive reading since February 2005.
John Longworth, Chairman of the CBI’s DTS Panel, said: “April’s survey could be interpreted as an early sign of a mild revival on the high street. But let’s not jump the gun. The economy as a whole is still working below capacity and recent improvements in the manufacturing sector have not been led by demand for consumer goods. Easter could not have come sooner for DIY and hardware stores, who rely on the boost from bank holiday sales. Its later position in the calendar may have helped overall sales to stabilise in April, compared with the same month a year ago. But sales were still considered poor for the time of year.” (CBI’s April DTS)
Political News
Ruth Kelly to take over at ODPM
As part of the Government’s post local election Cabinet reshuffle, former Education Secretary Ruth Kelly will take over John Prescott’s responsibilities at the Office of the Deputy Prime Minister. Mr Prescott remains as Deputy PM, but no longer has a specific departmental responsibility. David Miliband has been promoted from Minister of Communities and Local Government to become Environment Secretary. Alistair Darling becomes Trade and Industry Secretary, taking over from Alan Johnson.
Minister’s evidence session on PGS moved
Housing and Planning Minister Yvette Cooper's evidence session to the ODPM select committee inquiry into the proposed Planning-gain Supplement has been moved to Thursday 18th May. She will be joined by John Healy, Financial Secretary at HM Treasury. HBF is giving evidence to the same inquiry on 16th May.
Conservatives propose extra parking for new flats
The Times (2 May) reported that the Conservatives are drawing up guidance to allow for at least one parking space for every new home in a block of flats, preventing councils from imposing planning conditions that deter residents from owning cars. The Conservatives were also reported to be planning to expand station car parks to address concerns over commuter parking. (Times)
Housing Market
House prices rise in April according to Hometrack…
House prices rose by 0.6% in April, according to website Hometrack, to stand 0.9% higher than a year ago. This is the sharpest monthly increase reported by Hometrack in almost two years, with most of the increase seen in London and the South East. The average time taken to sell a property fell to just 4.2 weeks in London, compared to 8.9 in the East Midlands, 8.7 in the North West and 8.4 in Wales.
Director of Research Richard Donnell commented: “These results show a clear and ongoing north-south divide in the performance of the housing market. London continues to be the engine for national house price growth with values in the capital moving 1.2% higher over the month and by over 3% over the last quarter. In contrast, growth in the regions away from the south of England has totalled less than 0.5% over the last three months.” (Hometrack April National Housing Survey)
… while Halifax report a sharp increase…
House prices rose by a seasonally adjusted 2.0% in April, and 4.4% over the first four months of the year, according to the Halifax House Price Index. This meant that prices in the three months to April were 8.0% higher than a year ago, a rate that has accelerated quite sharply from a low of 2.3% in the third quarter of last year. However, much of the annual increase is due to particularly slow, and at times negative, growth around the same time a year ago.
Looking ahead, Halifax expect a gradual easing in the annual rate of price growth with Chief Economist Martin Ellis commenting: “Whilst the market may remain relatively buoyant over the coming few months, we expect the recent softening in the labour market and the continuing high level of house prices in relation to earnings to curb demand. Alongside higher utility and council tax bills, these factors should lead house price growth to moderate in the second half of 2006." (Halifax April House Price Index)
… as the mortgage market stabilises
There were further signs that the sharp rebound in mortgage activity over the past year has stabilised, with the Bank of England reporting a modest increase in the number of mortgage approvals from 114,000 in February to 116,000 in March (seasonally adjusted). While slightly lower than the 120,000 monthly approvals in January and December, the first quarter as a whole saw 35.7% more approvals than the same period a year ago and the monthly totals have been broadly stable for the past five months. (Bank of England Press Release)
Other News
House building and the Warbler hit the front page
The Independent ran a front page story (2 May) under the headline “The birds that blocked 20,000 new homes”, reporting on the building freeze on nearly 300 square miles across the South East, due to concerns about three species of rare birds, including the Dartford Warbler. The article reported that HBF has urged the government to step in urgently and also highlighted the very different objectives of the Department for Environment, Food and Rural Affairs, which supports the moratorium, and the Office of the Deputy Prime Minister.
The article reports that housebuilders in the area feel that English Nature (the Government’s wildlife agency) is “gold plating” its responsibilities by insisting on too big an exclusion area (in some cases a 5km zone) around the Special Protection Area. (Independent)
HBF Comment: HBF Executive Chairman Stewart Baseley also appeared on Radio 4’s Today programme on Tuesday in a report on the issue. Mr Baseley and HBF members have in addition spoken about the issue on a number of regional television broadcasts this week. The issue is now widely understood by the media and we will continue to work to maximise these opportunities to maintain pressure for a solution.
Benefits of greenfield development may be underestimated
Research commissioned by the Office of the Deputy Prime Minister found that the benefits of greenfield housing may be underestimated when looking at affordability and house price indices. The report found that house price indices may not fully account for some types of housing (particularly larger homes), and this bias may distort the affordability picture, and therefore targets for affordability, and the sort of homes that policies promote.
A problem with the standard indices are that they are transaction based, and hence underweight those types of property that are traded less frequently. It was found that less frequently traded houses tend to have higher rates of price appreciation. A policy that encourages high density development (the kind of homes that tend to be traded more frequently), could reduce the rate of house price appreciation in the area through this bias, while exacerbating the price appreciation of larger homes on greenfield sites, through a lack of supply of these types of dwelling, a fact not fully accounted for in measures of affordability. (Policy Implications Report)
Bugs under attack from development…
Around 40 species of rare insect and other invertebrates are under threat from the Government’s plans to build 120,000 new homes in the Thames Gateway over the next ten years, according to charity Buglife. The charity claimed that 40% of brownfield sites, especially those in London, were important for endangered bees, beetles, moths, dragonflies and other species, having been driven out of their natural habitat by intensive farming and the building of sea walls. The charity called for measures to be put in place to protect these “hidden treasures”. (Telegraph)
… as Conservatives leap to their defence
After a visit to several sites in the Thames Gateway identified by Buglife, Shadow Environment Minister Greg Barker said: "John Prescott has paid lip service to sustainability yet there is no mention of sustainable development amongst the nine key objectives which he has set the Thames Gateway Development Corporation. He has taken responsibility for planning and conservation away from democratically elected local authorities but his Development Corporation that replaced them treats sustainability and biodiversity as secondary issues rather than as key parts of a joined up strategy to protect and enhance the environment.” (Conservatives Press Release)
New guidance urges LAs to protect green belt
New guidance for Local Authorities issued by the Local Government Association urged councils to try and stop landbanking of green belt sites. Cllr David Sparks, Chair of the LGA’s Environment Board said: “Town halls are taking decisive action to protect the countryside and to make sure that people are not misled. In numerous cases plots of protected land have been ruined by stakes being driven into the ground to mark out plots. Councils will use all powers at their disposal to protect rural land, particularly in the green belt and areas of outstanding national beauty. These companies may not be breaking the law but anyone thinking of buying these plots of land should call their local planning department so they can get independent and impartial advice.”
Environmentalists want East of England plan “greened”
Pressure group the Campaign for the Protection of Rural England and the National Trust have teamed up to raise a petition to “green” the East of England plan. Keith Turner, Area Manager for the National Trust, said: “With one of the UK's fastest growing economies, the East of England faces major changes. We need the Plan to guide this process, balance economic growth with protection for our environment and heritage, and offer investment in the future. As it stands, the Plan risks unsustainable amounts of development which will have long-term impacts on internationally important green spaces such as Hatfield Forest, owned by the National Trust. Don't let it happen — support our campaign to make sure the region gets the plan it needs.” (CPRE Press Release)
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
HBF appears before Select Committee on PGS 16 May
Minister appears before Select Committee on PGS 18 May
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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