HBF Weekly News Summary Friday 20 Feburary 2009

Friday, 20 February 2008Top stories this weekLatest house building statistics released.....read more NHMB: "Shortfall of 1m homes by 2010 could send prices soaring when recovery comes." .....read more

Conservative green paper: "Control shift: Returning power to local communities".....read moreRightmove house price index published.....read moreCML: Buy-to-let lending in the fourth quarter of 2008.....read moreQuick LinksIndustry news Government and political news Housing market news HBF news Economic news Events
Industry newsLatest house building statistics released

The latest national statistics on house building were released under the auspices of the UK Statistics Authority on 19th February 2009.

Statistics in this release present figures on new build housing starts and completions in England. Figures for the UK and constituent countries are also available in the accompanying tables.

The latest statistics report on the period October to December 2008 and update those previously released on 20 November 2008.

Key points from the latest release are:

There were an estimated 16,300 seasonally adjusted housing starts in England in the December quarter 2008, down 27% on the previous quarter and 58% lower than the December quarter 2007;

Private enterprise housing starts (non-seasonally adjusted) were 64% lower than the December quarter 2007. Housing starts by Registered Social Landlords (non-seasonally adjusted) fell 5%;

Annual housing starts figures for England continued to decline. They totalled 105,000 in 2008, down 37% compared with 2007 and 43% below their 2005-06 peak;

Housing completions in England fell by 3% to an estimated 32,300 (seasonally adjusted) in the December quarter 2008 compared to the previous quarter. Compared with the December quarter 2007, completions were down by 25%;

Private enterprise housing completions (non-seasonally adjusted) were 32% lower in the December quarter 2008 than the December quarter 2007. In contrast, housing completions by Registered Social Landlords (non-seasonally adjusted) rose 10%;

Annual housing completions in England totalled 141,900 in 2008, down by 19% compared with 2007.

Download a copy of the statistics

to top NHMB: Shortfall of 1m homes by 2010 could send prices soaring when recovery comes

The underlying shortage of homes in England could reach "dangerously high" levels of more than 1 million in less than two years, according to David Pretty CBE, Chairman of the New Homes Marketing Board. His concerns were covered in articles across the national, regional and trade media.

While the property market is likely to remain depressed for some time, it will in due course gradually improve when more mortgage funding becomes available. This pent-up demand will then be released into a market unable to satisfy the nation's housing needs, says Mr Pretty, potentially sending prices surging back upwards:

"There is a very real possibility that property prices, which have fallen 15% or more, could rise back to 2007 levels within five years. These sort of pressures invariably happen to any market when demand far outstrips available supply.

"Even before the current recession, national housing production was well below previous decades. Today, we are in a far more difficult situation. The reality is that we are forming households at the rate of around 230,000 each and every year - that is the level we need to meet. But we haven't built in anywhere near those quantities for many years, so we now have a serious backlog which continues to build up.

"Back in 2004 the estimated shortage was around 450,000 homes. As we have only been building, at best, an average of around 160,000 per year in the last decade - a figure which is likely to collapse this year and next to around 75,000 a year - the arithmetic is stark: by 2010, pent-up demand for homes to buy, to rent and for social housing could well be over 1 million, and that is dangerously high."

to topPlanning Inspectorates' report on the examination of the Poole Core Strategy

This report contains some positive messages for the industry, including the deletion of policies demanding Lifetime Homes (see para. 4.58) and an attempt by the council to accelerate the timetable for the Code for Sustainable Homes with the inspector asserting the primacy of Building Regulations (see para. 4.99).

On the issue of affordable housing, the inspector argues that the 40% ‘benchmark' is ‘only a starting point' (para. 4.51).

Download a copy of the report

to top Government and political newsConservative green paper: "Control shift: Returning power to local communities"

Conservative leader David Cameron has launched a policy green paper outlining Conservative plans to "give power back to local communities".

He explained that "decentralisation, devolution and empowerment" are naturally part of a Conservative approach to Government, and stressed the importance of an "empowering state" rather than an "overpowering state".

Entitled ‘Control shift', the Conservative's decentralisation green paper outlines a series of policies to transfer power from the centre to local people and local institutions:

Abolishing all regional planning and housing powers exercised by regional government , returning powers and discretion back to local communities;

Revoking as a result all regional spatial strategies (including regional building targets) and repealing national planning guidance that relates to regional planning;

Enabling councils to revise in whole or part their existing Local Development Frameworks

Creating bottom-up incentives for house building, by allowing councils to benefit from a new government fund matching the increase in council tax revenues from new homes for a period of six years (and partly financed by abolishing the current Housing and Planning Delivery Grant);

Allowing councils to establish their own local enterprise partnerships to take over the economic development functions and funding of the Regional Development Agencies;

Giving local authorities a new discretionary power to levy business rate discounts, allowing them to help local shops and services, such as rural pubs or post offices;

Providing citizens in all large cities with the opportunity to choose whether to have an elected mayor, through mayoral referendums;

Greater use of direct democracy, including allowing residents to veto high council tax rises, and instigating local referendums on local issues;

Caroline Spelman, the Shadow Secretary of State for Communities and Local Government, said:

"It's not just about empowering local government; we want to empower the people it serves so that they can have more say in how much of their money they want their council to spend on their behalf."

Download a copy of "Control Shift"

to topLGA responds to Conservative local government green paper

Following the publication of the Conservative green paper, the Chairman of the Local Government Association, Cllr Margaret Eaton, said:

"The Conservative green paper on local government stated aim of giving more power to local councils and people is an excellent step in the right direction. The LGA has been encouraging all the political parties to move towards a more localist approach and away from central prescription and this demonstrates how our work has paid off.

"There are a number of proposals the LGA supports. A new relationship between local and central government is needed, and we are pleased that the Conservatives have adopted the LGA policy of a power of general competence. We share the desire to reduce the burden of council inspections and assessments and we support the incentives for housing growth."

HBF Note: We are studying the Conservatives' green paper in depth and will be discussing the issues it raises with their front bench spokesmen.

to topLiberal Democrats launch new plans to rescue the construction industry

The Liberal Democrats have launched new plans aimed at greatly increasing the supply of social housing, stemming the tide of repossessions and helping the construction industry. The new plans include:

Introducing a Repair and Renewal loan scheme for owners of empty properties if they agree to lease them for at least five years to housing associationsAllowing commercial properties temporarily being used for housing to claim commercial property rate reliefHelping lending to return to normal levels by introducing basic ‘Safestart' mortgagesAllowing housing associations and local authorities to use Homes and Communities Agency funds to improve newly purchased unsold private housing stockSlowing repossessions by ensuring courts make them the absolute last resort

Commenting, Liberal Democrat Shadow Housing Minister, Sarah Teather said:

"Millions of families have been let down by Labour's housing failures. As the recession deepens, social housing queues are growing ever longer while the construction industry has ground to a halt.

"Renovating empty and abandoned properties can provide low cost homes while boosting the struggling construction sector.

"Councils and housing associations must be able to access funds to bring abandoned properties back into use.

"Companies with empty commercial property need incentives to make it available for temporary housing, which will provide cheap accommodation and prevent it from falling into disrepair."

to top Housing market newsRightmove's house price index

Rightmove's house price index, published this week, reported that:

9 out of 10 home movers say that it is a "bad time to sell", yet optimistic New Year sellers raised asking prices by 1.2%;The average house price therefore rose from £213,570 in January to £216,163 in February, although this still represents a year-on-year fall of 9.1%;The continuing lack of fresh stock puts upward pressure on initial asking prices as estate agents bid for spring listings - agents competed for 75,140 new sellers compared to 137,442 last February;The year-on-year fall was the highest ever measured as record numbers of enquiries tracked prices falling towards perceived affordability zones.

Miles Shipside, Commercial Director of Rightmove, commented:

"Sales are being achieved at around 25% below peak prices, yet new sellers coming to market are starting out asking an average of only 10% less. Serious sellers need to set their initial asking price more realistically to get one up on the competition and take advantage of increasing numbers of bargain-hunters who have set their own price floor ahead of the return of mainstream purchasers.

"New sellers are 45% down compared to February last year. In spite of these being ideal trading-up conditions, discretionary sellers are being deterred by uncertainty over mortgage finance and employment, while pending repossessions were delayed by an informal Christmas amnesty."

to topNAEA comment on Rightmove's house price index

Following the publication of Rightmove's house price index, which showed a 1.2% increase in asking prices, NAEA Chief Executive Peter Bolton King said:

"It is too early to say whether this increase in property prices, picked up by several organisations including the NAEA, will continue. The NAEA believes that it reflects that in certain areas the downturn is slowing and hopefully beginning to bottom out, as opposed to heralding the end of the housing slump.

"What is clear is that if confidence is returning to the market in any form, it is the job of the Government and the major lenders to try responsibly to sustain it. The NAEA believes that a complete suspension of stamp duty from the Government, and increased availability of mortgages from the banks, would achieve this."

to topRICS new buyer enquiry research

Owner occupiers are returning to the housing market looking for bargains says RICS research released this week. RICS states that many potential purchasers believe that the market has reached a bottom but first-time buyers are still being denied access to the property ladder.

Following three successive monthly increases in the RICS new buyer enquiry series, RICS has asked further questions of its members to determine what is underpinning this sustained pick up in interest. 71% of Chartered Surveyors stated that lower house prices were responsible for the growth in enquires while 48% believed that buyers are increasingly convinced that the bottom of the market is in sight. Only 35% of surveyors believe that lower mortgage rates are tempting buyers. Meanwhile, just 15% referred to positive personal circumstances overwhelming negative macro concerns.

74% of Chartered Surveyors reported that it is existing owner occupiers who are driving the renewed level of interest while 38% of surveyors indicated that investors are coming back into the market. However, only 23% of surveyors thought that first-time buyers are a factor in the market. Interestingly, almost one in ten respondents suggested that overseas buyers were now looking for opportunities in the UK residential market, benefitting as they are, from favourable currency movements.

95% of Chartered Surveyors reported that existing houses were the most popular type of dwelling for those enquiring and only 32% of surveyors reported interest in flats. New build properties remain an even less attractive proposition for potential buyers.

Download a copy of the RICS new buyer enquiry research

to topCLG house price index - December 2008

The latest UK house price index statistics produced by Communities and Local Government were released on Tuesday 17 February 2009.

The latest statistics release includes data based on mortgage completions during the month of December 2008.

The key points from the release are:

UK house prices were 10.2% lower than in December 2007;The mix-adjusted average house price in the UK stood at £195,317 in December 2008 (not seasonally adjusted);UK house prices fell by 6.4% in the quarter ending December 2008. This compares with a fall of 3.0% for the quarter ending September 2008;Annual average house prices fell in England (-10.4%), Wales (-10.3%), Scotland (-6.0%) and Northern Ireland (-17.9%); Annual average house prices paid by first time buyers in December 2008 were 13.0% lower than a year ago. By comparison average house prices paid by former owner occupiers were 9.2% lower.

Download a copy of the statistics

to topNAEA: Housing demand is up but supply is down

Potential buyers are finally returning to the UK housing market - but are frustrated by a lack of housing supply and mortgage approvals. The National Association of Estate Agents monthly market survey found that in January the number of house hunters on an average estate agent's books had risen to 242 from 200 in December.

However the increase in demand did not translate into an increase in sales - which remained at six per agent in January. Encouragingly, however, 25% of those sales were to first-time buyers - more than double the number in December.

One reason why demand is not following through in transactions was demonstrated in the monthly housing stock figures, which showed that estate agents had an average of 75 houses on their books in January - the lowest number in more than 12 months and down from 100 in December. This is likely to be in part caused by sellers withdrawing their properties from the market after pricing optimistically and being unprepared subsequently to drop their prices.

NAEA figures showed that the average selling price across all types of property was 8.7 per cent lower than the original asking price.

to top HBF newsHBF meets European Commission on Energy Performance of Buildings Directive

HBF Policy Director John Slaughter this week met officials from the European Commission on behalf of our European trade association, the UEPC, to discuss the Commission's proposals for revising the Energy Performance of Buildings Directive. The Commission's proposals could lead to future changes in the methodology for determining building regulations under Part L and have a bearing on the UK's approach to defining zero carbon. HBF is keen to ensure that these issues and the potential impact on the industry's business climate are properly considered in the current European negotiations. We are also raising these issues with CLG who are leading on the negotiations for the UK Government.

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HBF response to CLG consultation

HBF this week responded to the CLG Consultation on Revised Circular on Costs Awards in Appeals. The response draws on member contributions from around the country at regional planning meetings and draws attention primarily to concerns regarding the assessment of unreasonable behaviour for which an award of costs may be made.

View the response

to top Economic newsCML: Buy-to-let lending in the fourth quarter of 2008

New lending for buy-to-let continued to decline in the fourth quarter of 2008. There were 37,000 new loans, worth £3.9bn - 12% down (19% by value) on the third quarter, and 56% down (65% by value) compared with the fourth quarter of 2007. This is almost certainly the lowest quarterly lending figure since 2003.

Outstanding buy-to-let mortgages represented around 10% of all loans, and around 11% of the value of all lending, at the end of 2008. Over 2008 as a whole, buy-to-let lending accounted for 10.6% of the value of total gross mortgage advances, down from 12.3% in 2007.

At the end of 2008, 2.32% of buy-to-let mortgages were over 3 months in arrears (without a receiver of rent in place), while a further 0.23% were over 3 months in arrears with a receiver of rent in place. The comparable arrears rate for the wider market (including buy to let) was 1.88%.

to topCML: Arrears and possessions in 2008

New statistics were published by the Council of Mortgage Lenders on mortgage arrears and possessions. Unsurprisingly, full year figures for 2008 show a sharp rise on 2007, but many steps are being taken to help borrowers facing difficulty.

There were 5,000 fewer repossessions than forecast in 2008, 40,000 repossessions in the year - 1 in 290 mortgages;

10,400 repossessions in the fourth quarter - 1 in 1,100 mortgages;1 in 64 mortgages in arrears of 2.5% or more;1 in 53 mortgages in arrears of three months or more (inflated by lower interest rates);75,000 repossessions forecast for 2009 remained unchanged.

Around 10,400 properties were taken into possession by first charge mortgage lenders in the fourth quarter of 2008, down from 11,100 in the previous quarter but up from 6,900 in the fourth quarter of 2007.

CML Director General Michael Coogan commented:

"Despite the upward pressure on mortgage arrears and repossessions arising from the problems in the economy and rising unemployment, both lenders and Government are continuing to find more ways to help more people stay in their homes.

"But there seems to be a sharp rise in cases where borrowers are handing back their keys or abandoning their properties. We strongly urge borrowers to contact their lender and work with them before taking this step, as there may be other solutions. Borrowers are still liable for their debt, even if they leave the property, so working through their problems is much more likely to be in their best interests."

to topCML: Gross lending declined in January

Gross mortgage lending declined to an estimated £12.4bn in January, an 8% fall from £13.5bn in December and a 52% fall from January 2008, according to the Council of Mortgage Lenders.

A slight decline is typically experienced between December and January. However, this is the lowest monthly total since April 2001. Bob Pannell, CML Head of Research, commented:

"Mortgage lending activity continues to be very weak and while people are searching eagerly for some signs of recovery, it would be unrealistic to expect a meaningful revival in lending in coming months. Even when conditions do improve, gross lending will be one of the later measures to recover."

to topBank of England publishes minutes of MPC meeting held 4th and 5th February 2009

The Bank of England published the minutes of the meeting of the Monetary Policy Committee (MPC) held earlier this month at which it was decided to reduce the Bank Rate by 50 basis points to 1.0%. The minutes state that:

"It seemed unlikely that the inflation target could be met solely by cutting Bank Rate. The short-term market interest rates that Bank Rate sought to influence could not go far, if at all, below zero. Furthermore, at very low rates of interest, the stimulus that a reduction in Bank Rate could provide was likely to be much reduced. Indeed, there might even be a point at which further cuts in Bank Rate could have an adverse impact on the economy since banks and building societies maintained a spread between their deposit and lending rates to cover the costs of providing banking services and to make a return on capital...

"There was a great deal of uncertainty about what would happen to banks' and building societies' ability and willingness to lend at low levels of interest rates. It was possible that the negative impact on profitability could be significant for some banks as Bank Rate fell further. Taking that into account, a majority of members concluded that a cut of 50 basis points was appropriate this month."

Download a copy of the minutes

to topMortgage and landlord possession statistics

The latest National Statistics on mortgage and landlord possessions have been released by the Ministry of Justice.

The quarterly releases present statistics on possession actions issued in county courts by mortgage lenders and social and private landlords in England and Wales.

26,008 mortgage possession claims were issued on a seasonally adjusted basis, 29% lower than in the fourth quarter of 2007 and 32% lower than in the third quarter of 2008;29,095 mortgage possession orders were made on a seasonally adjusted basis, 14% higher than in the fourth quarter of 2007 and broadly the same as in the third quarter of 2008;46% of mortgage possession orders were suspended compared to 46% in the fourth quarter of 2007 and 47% in the third quarter of 2008.

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EventsHBF ‘Building towards a brighter future' conference - Shapps and Kerslake to speak.

Tuesday 17th March 2009, Central London

Conservative shadow housing minister Grant Shapps heads a heavyweight list of speakers for this year's HBF Policy Conference that includes HCA chief executive Sir Bob Kerslake, CML director general Michael Coogan, housing expert John Callcutt, Zero Carbon Hub chief executive Neil Jefferson and, fresh from completing the Killian Pretty review David Pretty. Other speakers include economic experts Richard Donnell and Christopher Hill who will be joining HBF's John Stewart to further develop issues raised in a highly successful session at last year's Housing Market Intelligence conference.

The conference will be chaired by HBF executive chairman Stewart Baseley and will look at a range of issues and challenges currently facing the industry.

For more information and details of the full agenda please click here or contact the events team on 020 7960 1646 or events@hbmedia.co.uk

to topHope Challenge: 12 - 14th June 2009, Peak District

HBF's nominated charity, Habitat for Humanity, which builds safe, decent homes for families living in poverty, is organising a fundraising event to take place next summer. Hope Challenge 2009 is a challenge event for teams of 3-6 people and will test your initiative, your teamwork and your fitness. And by sleeping in your very own shelter you will experience some of the challenges faced by those who live in poverty housing. The event involves:

2 days and 2 nights in the great outdoors Mental and physical team challenges 1 overnight shelter to build, and sleep in 1000m of hill ascent and 20 miles of trekking A balance of fitness, strategy and team work

We are looking for teams of people who want to rise to the challenge of raising funds in support of the 2 billion people living in poverty housing around the world.

Click here for more information and entry requirements.

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For other HBF events visit the website http://www.hbf.co.uk/index.php?id=eventsandmeetings

For HBM events visit http://www.hbmedia.co.uk/

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Rosie Hinchliffe

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