A weekly news summary covering all aspects of the house building industry from Pierre Williams, HBF's Head of Media, available to members only.
Prices: No Crash But Growth to Halve
House prices are likely to grow only half as fast this year as they did in 2003 as higher interest rates start to bite, both the Rics and the Halifax predict. Broadly speaking, they expect growth of 10% in the North and 6% in London and the South East. However, a separate survey of homeowners revealed much less confidence, with 56% expecting prices to remain level or increase by a maximum of 5% by this time next year and 9% expecting a fall. Owners in the South East and Scotland are far more confident that prices will continue rising than those in the North. (All media)
40% Slump in FTBs
In the first 11 months of last year the number of first time buyers slumped to its lowest ever of 330,540 - 40% lower than 2002. The trend will continue this year according to most market watchers, although it is difficult to predict its eventual effect on the overall housing market. The average house price/earnings ratio has also increased to 4.27 against just 2.46 a decade ago. However, average mortgage payments account for 15.9% of gross earnings - substantially less than the 22.8% peak in 1998 and 18% in 1993. (All media)
Christmas Price Boom
Average prices grew at their fastest pace for a year in December with a rise of 1.8% to 142,033 according to the Halifax and the new FT house price index. The unexpected surge has surprised analysts and raised fresh concerns of an increase in interest rates if it persists. The Halifax insisted it was a blip: The housing market is undoubtedly strong but there are clear signs the market will continue to slow down naturally, said a spokesman. (All media)
Property is the Best Long Term Investment
Property is Britains most profitable long-term investment, new figures show. Average prices are substantially more than three times higher than 20 years ago, whilst the FTSE, which has just celebrated its 20th anniversary, has shown slightly lower growth of 330% over the same period. The figures are a strong selling point for property investment and suggest buy-to-let will become an increasingly-popular alternative investment to the stockmarket. (Express)
Immigration Will Cause 300,000 Homes Deficit
The number of new homes needed in the next 20 years, particularly in the South East, will be far higher that the Government has predicted because of an underestimate of the impact of immigration, according to the think tank, MigrationWatchUK. It said recent estimates were based on seven-year-old migration figures that were far lower than current trends. As a result, the Governments figures are likely to be 300,000 short. (Guardian)
New Wave of Thames Flood Protection
A team has been set up to start work on plans to protect the 212 miles of the Thames and the Thames Gateway from expected catastrophic flooding over the next century. The team, headed by the Environment Agency, also has to accommodate the Governments plans for 120,000 new homes in the Gateway expected to be built below sea level. Initial estimates put the cost of new flood defence works between 2015 and 2035 at 4bn. But the total bill could be far higher. Initial ideas suggest some homes being built on stilts, building Bangladesh-style escape roads and sacrificing large areas of Kent and Essex farmland to floodwaters if the need arises. (Guardian)
Labour Plans to Strip Councils of Greenfield Blocking
John Prescott plans to strip local councils of their power to block building on greenfield sites in order to create more rural jobs. He wants to reduce the grounds on which these councils can reject new building and will scrap their right to designate local places with special conservation status. The plans are geared towards commercial development to encourage business in the most deprived rural areas but planning is also likely to be eased for residential conversions of farm buildings, especially for low-cost homes. The CPRE reacted furiously saying the planning bonanza would bring a pox on the countryside (Times)
Brown Planning 2bn Stamp Duty Grab
The Tories have challenged the Chancellor over his own figures that show the Government is forecasting a 24% increase in Stamp Duty receipts whilst even the most optimistic forecasters predict house price rises of less than 10%. The Pre-Budget report showed the Treasury is expecting 9.3bn in Stamp Duty this year - a rise of 1.8bn. Conservative Treasury spokesman Mark Prisk, said: Either Brown has got his figures wrong or is planning an increase in the burden. (Express)
Expanding Universities Demand Greenfield Sites
Some 20 universities are demanding major campus extensions on neighbouring Green Belt and greenfield land to accommodate increasing student numbers. Some of the proposed schemes are potentially as large as small towns with accommodation and shops for up to 10,000 people. Although expansion is planned in Cambridge, York, Durham and Kent, the most controversial is at Bath where university bosses want to expand on 29 acres of Green Belt and have threatened to relocate if planning permission is refused. The situation is resulting in a stand-off between universities, councils and local residents. (Guardian)
Homes valued at More Than 50% of Countrys Total Value
Homes make up more than half the total value of the entire UK according to the first study of the nations worth by the Office for National Statistics. The statisticians estimate the value of the UK at just under 5 trillion, of which a colossal 2.7 trillion is accounted for in the value of homes. By contrast, commercial and public property, the second most valuable national asset, accounts for just 565bn whilst the national infrastructure comes in at 537bn. Although the statistic is effectively pointless, it demonstrates the importance and value the public places on housing. (All media)
Housebuilder Bosses Share in Boom
Britains leading housebuilder CEOs have this year started to reward themselves for delivering almost 10 years of booming company profits. This years improved pay round puts the bosses of housebuilding firms in a similar league to their contemporaries in other sectors but who usually head up larger firms. However, analysts say that far from being fat cats, housebuilder CEOs are rewarding themselves modestly compared to their potential earnings as self-employed businessmen. Analyst Stephen Rawlinson of Arbuthnot Securities, said: They have contacts with the land buyers and could do it themselves. Take Tony Pidgley. As a property developer he could probably earn 10 times his salary. Increased pay packages have also been mirrored by equally healthy dividend rises as companies have responded to investor demands to share in the loot. A good year all round for homeowners, housebuilders and investors, says the FT. (FT)
British Bath-Running Ability Questioned
The government has proposed that all new homes should be fitted with thermostatic mixing valves to reduce scalding incidents under a make bath-time safer initiative. Pierre Williams for HBF said that whilst any measure to reduce scalding must be seen as a good thing, given that three-quarters of scalding accidents involved young children, effective supervision would be better. The initiative has been ridiculed in the Press with the Times saying: It seems the Government has no faith in British bath-running ability. If only government could mandate that common sense should prevail. (BBC, Times, Independent)
Milton Keynes to Double in Size Over 20 Years
The Government is planning to double the size of Milton Keynes in just 20 years in what would be the biggest urban expansion in Britain for 50 years. A new 10-strong body unveiled this week will remove planning powers from the local council and fast-track housebuilding in 1,800 hectares to the West and East of the city, most of which is already controlled by four major developers. The housing will be built at much higher than current densities and this is already provoking complaints from existing residents that the local road system will be overwhelmed. (Guardian)
Bovis Predicts Bright Future
Bovis chief, Malcolm Harris, has predicted average price rises of 4% over the year. Although modest, the claims have weight as they are based on the firms strong finish to the end of 2003, forward sales more than 10% ahead of this time last year and average sales prices up 10%.The firm also expects house price inflation to be spread more evenly across the country (Times, FT, Express, Independent)