A weekly news summary covering all aspects of the house building industry from Pierre Williams
Laing Win Village Green Battle
Laing has won a High Court battle to stop the creation of a village green on land that could be used for housing in the future. The company said the proposed green in High Wycombe would reduce to zero the value of a land bank it held on the site. The judge threw out the proposal after hearing the land had been used for some years to produce a hay crop. This ruling protects the interests of housebuilders who have landbanks near built-up areas and lease it out for farming in the meantime. However the farming must not be too intensive for risk of objectors claiming it has an agricultural use. The judge ruled the planning inspector was wrong in concluding that the taking of a hay crop from the fields was compatible with establishing village green rights. (Times, FT)
Interest Rates Cut Again and Predicted to Hit 3% by Year End
The Bank of England decided this week to cut rates to 3.5% - their lowest for 48 years. However rates will drop to just 3% by the end of the year according economists at Deloitte & Touche. Despite the latest data showing the need for a rate cut has eased, most Bank watchers believe a continued cut in rates throughout the rest of the year as economic conditions continue to weaken. Mortgage lenders are also under fire for not immediately passing on the latest cut to borrowers. (all media)
HBF Urges Greater Fight Against Nimbyism
Nimbyism is at last being seen for what it is - the unacceptable protection of the haves from the have-nots. But Pierre Williams for HBF says the younger generation need to make their voices heard to local politicians as loudly as the nimbies have done if they are to help themselves get a foot on the property ladder. To date, nimbies have had the upper hand for totally unjustifiable reasons. With the Government now forced to at least try to act on undersupply, now is the time for victims of nimbyism to make their voices heard. (BBC Radio 5 Live)
Halifax Upbeat on Future House Price Growth
The Halifax says gloomy predictions for house prices have been overdone and estimates prices will increase by 10% over the course of the year. It said: The market is not as strong as it was last year but 2002 was exceptionally buoyant. We have every reason to be upbeat about the market with prices having risen 7% in the first half of this year - twice the long-term average rate of increase. (Express)
But Heavy Borrowing Risks Negative Equity
Homeowners are continuing to borrow so heavily against the value of their homes that there is a growing risk of negative equity, economists have warned. New figures from the Bank of England show property owners borrowed a record 13.6bn in the first quarter and expects this to rise to more than 50bn by the end of the year compared to a total 40bn last year. The extent of the indebtedness is what is causing concern if house prices should fall even slightly. (all media)
Labour Plans to Milk House Price Rises
The government has its sights squarely set on a series of tax-raising measures based on rising property prices, claims the Express. New Council Tax bandings are being proposed in the Local Government Bill expected to become law later this year. In addition, there is the prospect of Capital Gains Tax on the profits of house sales, plus increases in Stamp Duty and the possibility of a new annual tax based on the value of a home. These new taxes could be sold to the public on the need to stabilise the housing market.
Prescotts Plans Doomed
Government plans to improve housing supply by planning reform are doomed according to a yet-to-be-published report from London Residential Research. The organisation claims that despite the planning system have greatly increased the number of consents granted over recent years, housebuilders have failed to respond. It blames this on a lack of construction workers and the downturn in the residential market. (EG)
Prescott Confirms New Official House Price Index
The Government is pressing ahead with a new official index of house prices from September despite criticisms from Halifax and Nationwide that it will be riddled with statistical weaknesses. The new index was ordered after the government said it wanted a more reliable index to help the Bank of England set interest rates. The new index will be published monthly although the data used will be two months old by the time it is published. (Guardian)
HBF Note: Halifax and Nationwide have complained for obvious reasons. But they have little justification for doing so given that their own figures never tally with each other or any of the other indices. The Land Registry puts the average house price at 145,887 while the Nationwide says it is 127,214
Failure to Increase Housing Supply Will Cause Prices to Rocket
Britains private homes are already worth 2.7 trillion. But unless action is taken to increase supply this will soar to 7 trillion by 2020, a new report has suggested. The CEBR said: The increase in the value of the housing stock is so huge that even after two years of record equity withdrawal most households are much wealthier. (Observer)
Heathrow Night Flights Threaten House Prices
A European Court ruling to allow Heathrow more night flights will have a serious effect on the value of homes under flight paths. Large parts of west and south-west London, Windsor and Slough face falling property prices if the government, as expected, allows hundreds of extra night flights on the back of this ruling. The court ruling made its ruling on the basis that there was no evidence that the 16 flights a night allowed so far had affected prices. (Standard)
Parents Should Use Their Equity to Fund Homes for Kids
Parents have a duty to use equity in their homes to get their children on the property ladder, a building society boss has declared. With prices continuing to rise, Bob Jackson of the Cambridge Building Society told a meeting of business leaders that property rich parents should help out their children. He said: Most of the young people we see need a lot of help to get a mortgage and we as parents have benefited from the rise in property values over the years, so its up to us to help them. (Telegraph, Express)
Crest Riding a Wave
Crests excellent performance has routed recent media scare stories of a housing market slump says a Telegraph comment. A 19% increase in net assets per share to 208p, a stable market, first-half profits up 32% and one of the strongest landbanks in the sector, all help make Crest shine in what is, and is likely to continue to be, a healthy industry - house building. (Telegraph)
Pierre Williams
House Builders Federation
July 11, 2003
pierre.williams@hbf.co.uk