A weekly news summary covering all aspects of the housebuilding industry from Pierre Williams, HBF's head of media, available to members only.
Record Equity Withdrawal Fuels Rate Rise Fears
Homeowners embarked on an unprecedented borrowing binge last year on the back of rising house prices. New figures from the Bank of England show mortgage equity withdrawal not used to finance house buying, hit an all-time record of 16.2bn in the final quarter of last year. It brought the total for the year to 53bn - more than the total economic output of Ireland. This has prompted a new wave of alarm amongst Bank officials and could trigger a new interest rate hike as early as next week. Some analysts expect a half-point rise by the end of May. (All media)
More Confirmation of Market Strength
More evidence of the strength of the housing market has emerged with both the Halifax and the FT price indices confirming annual price rises of 18.5% and 15.1% respectively. However, in terms of last month, the indices varied widely with Halifax putting growth at 2.2%, while the FT said the rise was just 0.4%. (FT)
HBF Note: Again, the discrepancy of the indices over the short term must be causing confusion for the Bank of England, albeit that the FTs index, which is based on Land Registry data, must have more credibility than the lenders indices.
Gateway Aims for 90,000 Homes
Final plans to kickstart the Thames Gateway housebuilding programme will be unveiled by the end of next week. It will detail the provision of up to 90,000 new homes on a public and private investment budget of 16bn. However, the investment model on which the plans are based still show a 4bn shortfall. The plan, drawn up by the London development Agency, English Partnerships and government, will say that 30,000 homes could be built with relatively little infrastructure investment but that major funding will be needed to extend the building programme. (Observer)
Bellway Grabs a Slice of the Action
Bellway has secured the right to build half the 11,000 new homes in the 1.5bn Barking Reach development. The 15-year project is a joint venture between English Partnerships and Bellway, which will have to pay for a considerable portion of infrastructure improvements as a condition of the deal. The remainder will be offered to other private developers and housing associations. 30% will be affordable. (All media)
Wimpeys Excellent First Quarter
Wimpey has reported a strong first quarter both here and in the US. On the domestic front, sales rates are up on last year and advance sales have already passed their half-year target. At Laing Homes, which Wimpey bought 16 months ago, half-year sales targets have already been secured on volumes up 11% and revenues up 5%. Shares closed up 6.5p to 456.5p (FT, Times)
FTBs: The Crisis Worsens
Average house prices are now four times average earnings for first time buyers across the country. And to compound the bad news, the average first time buyer is now having to pay Stamp Duty in every region of the country. (Mail)
Sharp Rise in London Housing Output
The number of private homes in Londons planning pipeline grew sharply last year - from 64,000 in 2002 to 86,500 at the end of 2003. The growth has been put down to the number of supersites coming on stream - including Greenwich peninsula, Stratford, Silvertown Quays, Wembley and Cricklewood. If this pipeline can be maintained, Ken Livingstones target of 30,000 completions a year could be achievable. (EG)
Poundburys Fading Vision
Prince Charles country toytown, Poundbury, is turning into a failure according to the Observer. Whilst the scheme has turned into a cash cow for developers and in particular, Prince Charles himself, the rising prices of the privately-owned homes are causing resentment among the adjoining social housing tenants. As one put it: It has become a case of them and us. Another who moved in from the adjoining council estate, said: I think its an eyesore. Its all so higgledy-piggledy. I wish I could move back to the estate. (Observer)
HBF Note: A single article in the Observer hardly constitutes proof that Poundbury is a failure. However, the fact that social housing tenants are resenting the growing wealth of their immediate neighbours is a factor that should be noted in the push for mixed-tenure, high-density development.
Housebuilding on Firm Foundations
Housebuilders shares should continue to deliver solid returns according to the Times. Their brilliant performance over the past three years in a turbulent stock market is demonstrated by their 63% growth over this period whilst the stockmarket as a whole saw an 11% drop over the same period. In spite of this, major housebuilding stocks are still not as popular as they should be and remain cheap in spite the Barker Report promising strong housebuilding activity in the future. However, not everyone is convinced. Some fund managers insist house price rises are the sole reason for the sectors results, whilst others worry about further constraints on land supply. (Times)