A weekly news summary covering all aspects of the House Building Industry, from Pierre Williams
FTBs Priced Out Through Earnings Multiples
Although many aspiring first time buyers are putting off a decision to buy for fear of a downturn in the market, the overwhelming problem, according to research by the Skipton Building Society, is FTBs’ inability to raise a deposit or borrow sufficiently. Lenders are being accused of sticking too rigidly to income multiples during a time when interest rates are low and likely to stay that way.
HBF Note: The view that lenders need to scrap current lending multiples is gaining ground although many lenders are wary of being deemed irresponsible if they do so. If the Chancellor’s desire to see long-term fixed rates comes about then resistance to increased lending will reduce. With the raising of deposits now becoming a significant block to FTBs, some developers may find advantage in focusing incentives to tackle this. (All Media)
South Set for Slump as North Surges
House prices could be set to tumble in the South this year with London seeing falls of 5% but the North seeing an average rise of 10% according to the latest Hometrack calculations. Long-term, however, the residential market is looking good with prices increasing at least in line with earnings. Over 20 years the market has increased by 317% compared with 330% for the FTSE all-share index, so most experts conclude that the prospects are secure. (Sunday Times)
Mortgages are Bad for Health say Doctors
Mortgages should come with a public health warning a report by the British Medical Association suggests. It claims the struggle for those on low incomes to service debt on massive borrowings is making people sick, as they worry about repossession. The problem affects mainly those who have exercised right-to-buy and live in poorly-maintained homes. An Edinburgh University professor who contributed to the report said: “If you have a large sector of society who are homeowners but who can’t really afford to be, then health problems in society will multiply.” The report also looks at the overall impact of poor housing on the nation’s health and the effects on children living in bed and breakfast accommodation. Housing experts said the report confirmed Britain’s long-term failure to invest sufficiently in housing. (All media)
Interest Rates on Hold
With sterling hitting a record low against the Euro, the Bank of England has decided to leave interest base rates on hold at 3.75%. This decision comes despite increasing gloom from industry bodies about the health of the British economy. (BBC News)
Price Falls Greater Than First Thought
House prices have fallen in almost half of all London boroughs and in more than 30 other locations across the country according to the latest official figures from the Land Registry. In the last quarter, the price of the average home in Camden has fallen by £32,000 - 8%. Prices in 14 other boroughs have fallen including Hammersmith and Fulham, Islington and Hackney. In Windsor and Maidenhead prices have fallen by 10%, in Bath 6% and even Greater Manchester saw a slight fall. Average UK prices have been flat in the first quarter at £145,897 at the end of 2002 and £145,897 now. (Guardian, Times)
Britain Aims for US-Style Mortgages
The Chancellor’s mortgage guru Professor David Miles has said he wants to see greater use of the best bits of America’s mortgage market adopted here, with 30-year fixed-rate deals that can be swapped without penalty if interest rates fall. This is being seen as one way of trying to achieve greater stability of the housing market, although some lenders believe borrowers will be reluctant to take on long-term fixed rate loans. Miles said he was mystified why a US style market had not already developed here: “Maybe British borrowers just like living dangerously,” he said. (Times)
Anti-Development Feeling Shown at Ballot Box
Labour suffered election losses in the four growth areas outlined in the Communities Plan. A surprise loss was Northampton Council which fears the town will be swamped by new development. But loses were also apparent in the Thames Gateway. Some commentators have suggested development plans were a major factor in the election results although the extent to which this played a part can only be guessed at. (Inside Housing)
Study on OSM Costs
Imperial College London is to carry out a study comparing costs of off site manufacturing against traditional house building methods. It will also examine the industry’s capacity to respond to new housing requirements. Their findings are to be published in September. (Inside Housing)
English Nature Calls for Caution on Brownfield
The Government’s statutory wildlife advisor is concerned that brownfield land is being seen as the focus for house building. It says many sites abandoned for a long time have become wildlife havens that are far richer in bio-diversity that much greenfield. HBF said: “Finally people seem to be realising that greenfield sites aren’t always green.” (Housing Today)
Density Has Soared Since PPG3
The notion that house builders are wasteful of land has been disproved with the release of the latest figures showing a big reduction in completions of detached and a corresponding increase in flats and terraced homes since the introduction of PPG3. (Channel 4 News)