A weekly news summary covering all aspects of the House Building Industry, from Pierre Williams
Homes Still Affordable says Latest Survey
Homes remain affordable despite sharp price rises with buyers spending just over one-third of income on their mortgages a survey by the Cheltenham & Gloucester reveals. However, the Nationwide disagrees saying smaller pay rises and higher tax burdens have reversed this. C&G’s figures compare with 28% of pay going on mortgage servicing in 1999 but 71.3% in 1990. Nevertheless, the number of first time buyers has fallen to record lows - a situation exacerbated by borrowers no longer being able to borrow salary multiples as high as those in the previous boom and lenders requiring bigger deposits. (FT)
Rents up as Homeowners Cash in
The amount of homeowners selling up to rent in expectation of a price crash is underpinning rents. Rental demand surged at its fastest pace for two years in April but most commentators say those thinking of selling to rent now have already missed the boat as a full-scale slump in prices is unlikely. Rents are on the up again as a result of the number of lessees catching up with the number of lettings available. (Sunday Times)
HBF Warns Government That Homes Targets Look Optimistic
House builders have warned the Government that a skills shortage is threatening plans for 1m new homes in the south east by 2016. The Chancellor accepts the need for new homes is key to achieving price stability. But planning constraints and the skills shortage are likely to mean the target is missed by at least 10%. The limited amount of public investment in infrastructure - particularly in the Thames Gateway - would limit the number of homes built. HBF said planning system improvements must include mandatory local authority housing targets and warned that Government exhortation on LPAs to deliver in the past had failed. (The Business)
Planning Minister Calls for More House Building
Planning Minister Jeff Rooker has praised the level of brownfield being used for housing but called for more house building and urged local authorities to make more land available. He said: “While I am pleased to see we are exceeding our target for building new homes on brownfield land, I am concerned this is being achieved at a time of record lows in house building. People need more homes and they need them now. House builders tell me the planning system can act as a barrier to development. Our proposed changes to the planning system should help speed things up. In the meantime I would urge councils to think creatively about the land they have and the powers they can use to make sure more high-quality homes are provided as a matter of priority.” (Trade press)
Media Row Over House Prices
Overwhelming media speculation over the prospects for the housing market has reached a level where newspapers are turning on each other. The Express chose selectively from a report by the Economist to produce headline “World House Prices Crash”. The Telegraph responded by saying “There are not many readers of the Express these days” and It dismissed the notion of a crash citing the planning system’s continuing failure to allow sufficient house building. (All media)
Planning Gain Demands Increasing
Government will have to curb the excesses of some LPAs for planning gain if sufficient homes are to be built the HBF has warned. Citing some of the more absurd demands, Pierre Williams for HBF and Professor Stephen Crow tell the BBC that lack of public investment, and in some cases clear abuse of S106 demands, are restricting the viability of some sites to the detriment of housing completions and increasing delays and uncertainty in the planning process. (BBC R4)
Top Schools add £50,000 to House Prices
A good primary school catchment area adds almost £50,000 to average house prices a Barclays survey reveals, whilst there are seven locations where catchment areas more than double average prices. In top spot is Ashover Primary in Chesterfield where average prices are 264% above those outside the area. The survey suggests the massive increase in values is logical when compared with the cost of having to send a child to private school to get a similar quality of education. (Telegraph)
New Calls for Rate Cuts
The Bank of England is coming under renewed pressure to cut base rates once more after grim warnings about the state of the economy. The service sector faces a “tortuous and protracted” road to recovery according to the CBI. A “knife-edge” decision is expected on whether to lower rates when the Bank committee meets later this week. For now the committee is split, with half arguing for a cut now and the others demanding more proof of the economic slowdown. (Guardian)
Government to Overturn “Gummer’s Law”
The government is to overturn a planning law condition allowing the building of “truly outstanding” large country houses on greenfield sites. The condition was approved in 1997 by the then environment minister John Gummer. But the current government wants it abolished saying there is a need for affordable homes in the countryside and that the exception plays no part in its plans. Both RIBA and Cabe have criticised the move. (Telegraph)