A weekly news summary covering all aspects of the house building industry from Pierre Williams, HBF's Head of Media, available to members only.
Renewed Calls for More Housebuilding
Fears of a downturn in the housing market have prompted renewed calls for more housebuilding to address the rapidly worsening shortage. The Halifax said the country would be 500,000 homes short of requirements by 2021 if housebuilding was not stepped up, and blamed the planning system for the worsening shortage. But it also said the proportion of detached homes being built was rising and called for more smaller dwellings to reflect the growth of smaller households. Pierre Williams for HBF warned that the risk of market volatility increased with worsening undersupply and that detached housing growth was in the North. (All media)
HBF Note: There appears to be a growing awareness that short term economic factors combined with long term undersupply is fuelling the cyclical market and increasing concern that not only are revised changes to planning likely to prove insufficient but that brownfield housing hopes depend on major public investment - as below.
Prescott Faces Brownfield Setback
Prescott’s aim of large scale housebuilding on brownfield has been set back by a report from English Partnerships. The regeneration agency’s first detailed study of brownfield reveals that just 11% of the total stock of 65,000ha nationwide is free from market or regulatory constraints. This means viable supplies will run out in just two to three years, whilst in the crucial south east supplies will last barely 18 months. Although EP has put a gloss on the report, it conceeds that in the medium term, continued realisation of the 60% brownfield housebuilding target “cannot be guaranteed. (FT)
Labour Admits Home Ownership is Election Winner
Mindful perhaps of growing doubts about the costs and deliverability of affordable housing, Alan Milburn, who is charged with drawing up the next Labour manifesto, has called for a big expansion in home ownership. Although the Chancellor is “likely to be irritated” by Milburn’s decision to discuss the housing market ahead of the Barker Review, Milburn said: “What we can’t do, particularly now the Tories have a new leader, is to sleep walk into the next general election”. He added that the exclusion of 30% of the public from home ownership was creating a widening wealth gap. (FT, Guardian)
HBF Note: Although left unsaid, Milburn’s comments add to the impression that Government is worried about its ability to deliver enough affordable homes. It also demonstrates that government must be aware that increasing affordable housing and expansion of the “property-owning democracy” are mutually exclusive.
McCarthy & Stone’s Record Results
Argument about the prospects for the housing market continues unabated, but housebuilders are thriving. Forecast-busting results from McCarthy & Stone plus the quarter, rather than half-point increase in interest rates, have given the sector a boost. Announcing a 54% jump in full-year pre-tax profits to £116m, boosted by operating margins of 44%, CEO Keith Lovelock, said: “It was an outstanding performance.” Share prices jumped 13.75p to 512.75p. The rest of the sector benefited with Berkeley racing up 40p to 840p; Taylor Woodrow up 10.75p to 242.5p, and Persimmon adding 13.5p to 474.5p. UBS has given the whole sector an upgrade in its belief that house prices will remain buoyant thanks to limited rate increases. (Times, FT, Independent)
Prices Rise Despite Sales Fall
The number of sales has fallen but prices continued to rise - albeit at a much slower pace over the summer - according to the latest Land Registry figures. The average home now costs £162,000 - a rise of 10.6% on the year. Sales volumes are down 10%. Not surprisingly Greater London saw the slowest price growth of 5.4%, followed by the South East on 10.4%. Annual growth in the North was 24.3% with Wales and the East Midlands not far behind on 20%. (All media)
Government Proposes S106/Tariff Choice
The Government has outlined proposals to give developers the option of choosing between negotiated planning gain agreements or a one-hit tariff. The idea is to create greater certainty and speed in the planning process. HBF has expressed concerns about the limited consultation period available for the complex subject to be discussed and believes some councils could be tempted to set the tariff too high in an effort to stop development. (Times, trade press)
Cost of Housing Could Stall Heathrow Expansion
Government hopes to expand Heathrow Airport have been hit after ministers were warned that planning law and the costs of compulsory purchase could prove prohibitive. The plans would require the demolition of 770 homes. The cost of throwing so much money at these homeowners to avoid the possibility of an inquiry and judicial review might be more than the government can afford. (Independent)
Embarrassed Prescott Drops Flat Fight
A fortnight after being attacked by an ITV News reporter for having “four homes”, John Prescott has abandoned his legal fight to keep hold of a union-owned flat in South London. Despite having resigned from the RMT Union in June last year, Prescott attempted to hold on to the ultra-low rent property. But since the news item appeared during an affordable homes conference, he has had a change of heart. A union source, said: “We’ll be glad to see the back of him and I imagine he’ll be hoping it puts an end to the negative publicity.” (Times)