A weekly news summary covering all aspects of the housebuilding industry from Pierre Williams, the HBF's head of media. Available to members only.
Flood map could slash house values
A flood-risk map published by the Environment Agency could slash the value of hundreds of thousands of homes and deal a serious blow to many regeneration areas - notably the Thames Gateway. The map suggests that 10 percent of the country’s housing is at risk; a figure likely to increase by 70 percent as new development is concentrated in flood plains or low-lying areas. The report will also question whether new development in the Thames Gateway will be insurable. A new category of a one-in-1,000 year risk has been added, aimed at preventing local authorities from granting planning permission for new housing, and much of the gateway falls into this category.
Pierre Williams for the HBF, said: “What we need from government is action and investment on flood defences, rather than words.” The Association of British Insurers says weather-related claims on homes have doubled since 1998 and reached £6 billion last year. Claims are expected to triple by 2050. (All media)
House price “revival” doubted
The Halifax says house prices rebounded in September with a 1.4 percent increase compared to a 0.5 percent fall in August. The FT house price index concurred with a 1.6 percent rise. But most housing economists were sceptical that - even if the figures were correct - they amounted to a market revival. An economist at Global Insight said: “The rise seems very much at odds with most of the other housing market data and survey evidence.” Even the Halifax’s chief economist Martin Ellis, said: “The 2.7 percent rise in the third quarter was less than half the 6.1 percent gain in the second quarter, providing further evidence that house price inflation is slowing.” (All media)
Bank pegs rates
As expected, the Bank of England pegged rates this week at 4.75 percent. The decision was a near given after figures showing the housing market has cooled and factory output is down. The British Chamber of Commerce said it would have been “reckless” to raise rates, especially since the recent and relentless rise in oil prices. Whilst expectations of a further quarter-point rise, probably early in the New Year are still strong, there are an increasing number of analysts who believe the next move in rates will be down. (All media)
Crest gets into bath with Grosvenor
Crest Nicholson has joined forces with Grosvenor, the Duke of Westminster’s property company, on a £1 billion mixed-use development in Bath. The project will see 2,000 homes and 1 million sq ft of commercial space on a 26-hectare brownfield site west of the city centre. The site is co-owned by Crest, Grosvenor, the city council, British Gas and British Land. About 30 percent of the housing will be allocated for key workers and social housing. Public consultation starts next month and, if approved, construction will start in 2006 and take 12 years. (Times)
HBF note: Investors greeted the excellent news in usual fashion - shares fell 7p to 350p
Blairs could lose £50,000 from sale of Bristol flats
Tony and Cherie Blair could lose £50,000 after deciding to sell the two new Bristol flats they bought two years ago. They have been left exposed by a combination of an excessive supply and falling demand for flats. The price of flats in Bristol has barely moved since they bought. A local agent said: “It is quite difficult to get high prices at the moment. The Blair’s are unlikely to get their money back.” The FT highlights the huge shift away from housebuilding - especially detached - to flats, and how this market is being dented by the fall of investor buyers from about 90 percent at the peak to about 30-40 percent now. (FT)
Housing: the “mother of all bubbles”
The chief economist of American Express has joined the ranks of housing market pessimists. John Calverley believes the market is currently in the “mother of all bubbles” and could slump by 30 percent as prices return to their long-term average. The economist, who predicted the crash of the early 90s, argues that modern economies are increasingly dominated by price bubbles, be they in shares or housing, and discusses this in a new book called Bubbles And How To Survive Them. (Guardian)
HBF and energy-efficiency: concentrate on the real problem
With housing pumping out a quarter of Britain’s greenhouse gas emissions, government needs to concentrate on improving or replacing older stock rather than issuing endless changes to building regulations, says the HBF. Due to the reluctance of the planning system to allow enough homes to be built, Britain has the second oldest housing in the EU, much of which is hopelessly inefficient. Concentrating on this huge problem would be much more effective, both in terms of cost and result, than trying to make new housing which is already highly-efficient and yet constitutes a tiny proportion of the stock, slightly better. (Observer)
Tories: Barker is a myth
There is no housing shortage. The Barker report is “fiction”, based on bogus statistics. Demand-side pressures drive up house prices. An increase in supply is at best fanciful and at worst irresponsible. All of this is the view of Conservative shadow minister, John Hayes, who immediately went on to say a Tory government would tackle homelessness and move more households from social housing into market housing. On a more positive note, the Tories are getting their teeth into the housing tax issue and are promising to review Stamp Duty, Inheritance Tax and Council Tax, if elected. (All media)
HBF note: The Tories have often and rightly accused the government of a lack of joined-up thinking. But with comments like these, perhaps a little introspection is required.
Stanhope to cut cost of “affordable” by 25 percent
Stanhope is to cut the cost of building 4,500 new homes in East London by 25 percent. The company is so confident it can do this that is has reflected this in the pricing of the project which received planning consent last month. Stanhope’s Sir Stuart Lipton, said: “We have done our homework and we have proved these costs are achievable. I can tell you without any doubt this is going to happen.” The rub, however, is that its success will be based on the company’s forecasts of a change in attitude to high-rise living and a willingness to pay a premium for it. Sir Stuart said some housebuilders (but primarily commercial contractors) had made “great strides” on cutting costs. (Telegraph)