A weekly news summary covering all aspects of the House Building Industry, from Pierre Williams
Property Market “Returning to Life”…
Upmarket estate agents claim the “Baghdad Bounce” has finally arrived on the housing market with an upsurge of viewings and offers. Hamptons said it is experiencing a “strong upturn” in all regions with transactions up 62% in April compared with March. John D Wood agreed. A spokesman said: “In the last few weeks we have seen a dramatic improvement in activity.” (Telegraph)
…But Growing Doubts Persist About Long Term Prospects
The latest RICS report agrees that the post war period has produced an upsurge in interest but says buyers remain cautious and it expects total year price rises of not more than 10%. A spokesman said: “There is slightly more confidence. That hasn’t translated to any great degree to an upturn in the market. Buyers are still quite cautious.” (FT)
Housing Conference Predicts “Slow Strangulation”
Hundreds of investment bankers and fund managers who attended a conference on the UK housing market have failed to agree on a likely outcome. Views ranged form a slowdown to annual growth of 4% to a doomsday scenario of a 40% slump in prices. Roger Bootle of Capital Economics predicts a crash of 15-20% over the next three years while Martin Ellis of the Halifax insists that low interest rates and the low level of housebuilding will continue to underpin the market. Richard Donnell of Savills said the one-off shift in prices caused by low interest rates had run its course and he expects a “slow strangulation” of the market as national insurance and tax increases start to bite into buyers’ spending power. After hearing all arguments the City audience predicted that in three years prices would be between 10% lower and 10% higher than they are today. In a separate report, the Bank of England has concluded that prices rises will “grind to a halt” over the next year. (Independent)
Sales of £1m Homes Slumps to Two-Year Low
Wealthy Londoners are rushing to sell their homes, fearful that a slump in the £1m-plus market heralds a collapse in the market. Sales of £1m plus homes has fallen to its lowest level for two years while to stock of unsold homes at Hampton’s estate agents has increased by 50% on a year ago. This contrasts strongly with the agent’s upbeat assessment of the market for April. Land Registry figures show 300 £1m-plus homes were sold in London in the first three months of this year compared to 628 in the last quarter of 2002. (Independent)
Best Teachers to Get Mortgage Help
In a further attempt to tackle the exodus of key workers from areas of high house prices, the government has announced that the best teachers will get up to £90,000 towards their mortgages. Final details will be announced over the summer. But teaching unions have branded the scheme “divisive” and other political parties have dismissed the scheme as “hype”. (Times, Mail)
New Thames Bridge Planned for East London
Ken Livingstone has announced plans for a new six-lane road bridge across the Thames between Thamesmead and Beckton. Business groups have welcomed the plans as a major contribution to the regeneration of this part of the Thames Gateway but environmental groups claim it is flawed. (Evening Standard)
Londoners Need Double Average Salaries to Buy
New research shows first time buyers in London now need salaries of £62,000 to buy an average home. The effect is to make those in social housing stay put far longer than they otherwise would, with the result that the number of households in temporary accommodation has risen 10,000 in just two years. (Standard)
Plumbing Course Overwhelmed by Applicants
After the media highlighted the shortage of plumbers, a plumbing course has been inundated with more than 2,000 applicants for just 36 places. Places on the course at Bristol College were so fiercely contested that some hopefuls camped outside overnight to secure a place. Applicants included solicitors and accountants eager for a career change. (Telegraph, Mail)
Buyers Shun 110% Mortgage
Only four buyers have taken up a 110% mortgage introduced by the Bristol and West last December. The low take up has comforted mortgage watchdogs who fear irresponsible lending could result in a disaster if house prices fall. However, it also indicates first time buyers are taking an increasingly cautious view of the market. (FT)
Kent Says “Planning not to Blame” for Housing Shortage
The leader of Kent County Council said his county’s failure to provide enough housing was due to lack of funding for infrastructure rather than a failing planning system. He told a Local Government Association conference: “ The government must simply back its house building plans with the corresponding necessary infrastructure funding. This must be guaranteed by the Chancellor.” (Property Week)
Pierre Williams
Head of Media
House Builders Federation
May 16, 2003