A weekly news summary covering all aspects of the house building industry from Pierre Williams, HBF's Head of Media, available to members only.
Government Index: Price Falls
Almost 2,000 (1.1%) was wiped off the value of the average home in November according to the Governments new index on house prices. The Office for the Deputy Prime Minister said average prices fell from 161,365 to 159,480, causing annual growth to fall sharply from 12.1% to 9.7%. The figures fly in the face of claims from the Halifax and Nationwide that claim prices rose over the same month by 1.1% and 1.2%. The ODPM index was introduced to provide a more accurate picture of what was happening in the market but some commentators are still sceptical of the latest figures and the general view is for an 8% average rise over the year. (All media)
HBF Note: The discrepancy has re-ignited the debate about the accuracy of house price indices but the alleged fall in prices surprisingly received relatively little media attention - perhaps due to the continued overall prediction of a continued but more moderate rise in prices over the coming year.
Rates Held But Rise Expected Soon
A quarter-point rise in interest rates in February is on the cards after the Bank of England opted to leave them on hold this month. Members of the Banks Monetary Policy Committee have already signalled rates are likely to rise slowly through the year as growth picks up and, although the latest inflation figures are running below expectations and High Street sales are weak, few analysts suspect an easing of inflationary pressures will last. (FT, Telegraph, Independent)
Affordability Crisis Spreads Nationwide
New figures reveal that last year a further 88 towns - all outside the South East - joined the list of areas where average homes cost more than 100,000. A salary of 40,000 or more is needed to buy an average home in 80% of the 634 towns studied in the Halifax survey. (trade press)
Sellers Packs Delayed
Introduction of the Governments much-hyped Home Information Packs has been delayed indefinitely after ministers bowed to concerns about the ability to make them work. A lack of sufficiently trained home inspectors and satisfactory insurance arrangements, plus claims that the costs of the packs to vendors would be 800 rather than the governments estimate of 350, prompted the climbdown. Opening the second reading of the Housing Bill, Housing Minister Keith Hill, said the packs would be brought in only when were fully satisfied that all the conditions are in place to make this a success. (Telegraph)
London Drops From Top to Bottom of Buy-to-Let League
London has fallen to the bottom of the league for investment returns on buy-to-let, losing out to Yorkshire and Humberside which gained top spot. In London, investors can expect returns of just 5.8% while Yorkshire is riding high on 10.3% - excluding house price inflation which if included would have delivered returns of close to 40%. . The North East and North West were the next best performers, both on just under 10%, while Liverpool saw demand for buy-to-let properties soar. (Times)
Booming Taylor Woodrow Marred by Dollar Worries
An excellent year for Taylor Woodrow both here and in the US has been marred by the weakening dollar and the apparent delay in sale of its St Katherines Dock development in London. Completions were up 24% in the UK, whilst production was up 52% in the US with a forward order book worth 444m at the end of December. The UK order book more than doubled over the year to 575m, reflecting the acquisition of Bryant in 2002 and of Wilcon last year. CEO Iain Napier said: 2002 was just a crazy year with people queuing up to buy houses off-plan. Predicting a more settled market with price rises of 5% to 10% for the year, Mr Napier added that the sale of St Katherine Dock was strategically desirable but not essential. (FT, Times, Telegraph)
Ministers Use London Housing Allowance to Buy Country Homes
Fourteen Government ministers in the Lords are claiming 28,000 a year to help them buy second homes. The allowance is paid to ministers who keep a second home in London to compensate them for the cost of having to be in the capital. However, many of those already living in London are using the money to fund a second home in the country. Once they have that, they become eligible for the payment on their London home. Officials admit they can do nothing about it. (Times, Mail)
Government Backs New Thames Gateway Bridge
The Government is backing plans for a 450m road bridge linking Beckton and Thamesmead in the Thames Gateway. The bridge, funded with 200m of government money with the remainder raised from vehicle tolls, would provide a serious boost for regeneration in the area. Transport Minister Tony McNulty said: Effective regeneration goes hand in hand with effective transport links. The proposal is fiercely opposed by environmentalists and a by much of the Board of Transport for London. (FT, Guardian)
Larger Homes Needed in Urban Areas
Inner cities need larger homes to stop the exodus of families the a study by the Joseph Rowntree Foundation has concluded. Chris Leishman a researcher for Heriot-Watt University said: The danger of building one and two-bedroom flats is that it risks polarising city centres and the suburbs and could lead to a situation where we dont have any families living in the city. HBF said the study confirmed what was already known, that all people aspired to a sizeable home of their own. (trade press)
Council Tax to be Scrapped?
Council Tax could be scrapped in its current form within four years due to a wave of protest over soaring bills. But owners of expensive homes in London and the South East may have to pick up the tab. Proposals for change could be announced as soon as the summer. The potential is for wealthy homeowners to be hit twice, through a top tier for expensive houses and a higher regional rate. Poorer areas would benefit. (All media)