HBF Weekly News Summary Friday 22 August 2008

Top Stories *Bank of England publishes minutes of Monetary Policy Committee meeting....read more *House price falls accelerate.....read more *£100m for affordable housing in Scotland.....read more

Top stories this weekBank of England publishes minutes of Monetary Policy Committee meeting....read more

House price falls accelerate.....read more£100m for affordable housing in Scotland.....read more Quick LinksEconomic News Housing Market News Industry News Government News HBF News Events Economic NewsBank of England publishes minutes of Monetary Policy Committee meeting

The Bank of England released the minutes for the Monetary Policy Committee meeting, held 6 and 7 August, at which it was decided to maintain the Bank Rate at 5.0%.

The minutes showed that the MPC decided the main risk from tightening policy would be that "...an unexpected rate rise might adversely affect business and consumer confidence, adding to the near-term downside pressures on activity and causing a material undershoot of the inflation target in the medium term. Although rates could be cut later in that event, the downturn would be unnecessarily deep, adding to the volatility in the economy..."

With regards a potential cut in the Bank Rate, the minutes state that:

"The main risk associated with an immediate cut was that it could cause wage and price setters to conclude that the Committee were more concerned about sustaining output growth than about returning inflation to the target. In that case, the risk of elevated inflation persisting, and perhaps rising further, would increase."

Download a copy of the minutes

to topEncourage the savings habit with a deposit scheme (and £5,000 tax-free bonus) for first-time buyers

The Government should immediately set up a national Home Deposit Savings Scheme offering substantial tax-free bonuses to help struggling first-time buyers get on the housing ladder, says David Pretty CBE, Chairman of the New Homes Marketing Board.

Under Mr Pretty's plan, savers would get up to five years to accumulate a maximum of £20,000, at which point they would receive a 25% tax-free bonus or concession, pushing the maximum possible total to £25,000.

In a statement, Mr Pretty said:

"This final amount would cover a typical 10% deposit on a new home plus Stamp Duty, legal fees and removal costs... Such a scheme would not only be a great boost for beleaguered first-time buyers but would encourage and reward a return to old-fashioned saving habits - something we need now that the days of easy credit are gone."

Mr Pretty stated that first-time buyers deserved special help because they are crucial to the housing market and wider economy, and are among the worst hit by the credit crunch.

Gross mortgage lending subdued in July

Gross mortgage lending totalled an estimated £24.8bn in July, up 5% from June and down 27% from July a year ago, according to the Council of Mortgage Lenders.
Bob Pannell, CML Head of Research, said:

"While there was a small month-on-month increase in activity, it represented a notable decline from a year ago. This continues the weaker picture seen in June and points towards the more subdued levels of lending we are likely to see in the second half of 2008."

Download a copy of the July gross lending table

to topScottish mortgage market slowdown less severe than UK

The mortgage market in Scotland has contracted, but is still faring better in the unfavourable conditions affecting the whole of UK, according to new figures from the Council of Mortgage Lenders.

There were 18,500 loans for house purchase in the second quarter of 2008, an 18% increase on the previous quarter, compared to a 5% increase across the UK. This is a 34% decline from the same period last year but still substantially less pronounced than the UK-wide decrease of 46%.

There were 6,600 loans to first-time buyers in the second quarter of 2008, up 5% on the previous quarter. But this was 31% lower than same quarter last year. The proportion of loans to first-time buyers in Scotland decreased from 40% in the first quarter of 2008 to 36% in the second quarter.

"We need mortgage providers other than banks"

A letter signed by the Director of the New Local Government Network, Lead Members for Housing on London Councils, Leaders of Manchester, Bristol, and Portsmouth City Councils, and Leaders of Lambeth and Hackney borough councils was published in The Times this week. The letter called for the Government to consider three reforms:

"First, legislation should allow councils to offer targeted deals to the public and the provisions specifying a blanket "standard national interest rate" for council mortgages should be reformed. Secondly, the Government should ask the Public Works Loans Board actively to encourage councils to revive their public banking functions. Thirdly, the Chancellor should set aside public borrowing capacity for council mortgage provision and frame new guidelines in conjunction with local authorities."

to top Housing Market NewsHouse price falls accelerate

Rightmove's House Price Index reported this week that:

The average property asking price dropped -2.3% month on month, from £235,219 in July to £229,816 in AugustThe year on year drop in average asking price was -4.8%London was the worst hit as new sellers reduce prices by £21,000 in a monthThe number of new sellers hit an historical August lowThe average unsold stock of property per estate agency branch increased from 77 last month to 78

Miles Shipside, Commercial Director of Rightmove commented:

"Despite some deals being done at prices that begin to address affordability concerns, the number of transactions this year is in danger of being the lowest since 1959. This raises serious questions as to whether any short-term incentives by individual UK entities, such as the Government of the Bank of England, would be effective in speeding up the market recovery against the backdrop of the global problems of the credit crunch."

Download a copy of the Rightmove House Price Index

to topNAEA members report shows some signs of levelling out but consumers still lack confidence in the market

Members of the National Association of Estate Agents (NAEA) reported that the current market is levelling out; however there are still signs of uncertainty. July's figures show that there is still a lack of consumer confidence, with less people entering the market. June's figures report that the percentage of first time buyers is down to 10.7%.

There was however stability reported in the number of sales agreed, the number of viewings before a sale is secured, the time between instruction and the sale and the percentage of agreed sales that have fallen through.

to top Industry NewsLatest national statistics on house building released by the UK Statistics Authority

New figures from National Statistics, the Government's independent body, were released this week by CLG on new build starts and completions.

The latest statistics report on the period April to June 2008 and update those previously released on 15 May 2008.

Key points from the latest release are:

There were an estimated 33,400 seasonally adjusted housing starts in England in the June quarter 2008, up 2% on the previous quarter but 19% lower than the June quarter 2007.

Private enterprise housing starts (non- seasonally adjusted) were 27% lower than the June quarter 2007. In contrast, housing starts by Registered Social Landlords (non-seasonally adjusted) have risen 56% over the same period. They are now at their highest quarterly level in eleven years.

Annual housing starts figures for England continued to decline. They totalled 147,500 in the 12 months to June 2008, down by 12% compared with the same period a year ago and almost 20% below their 2005/06 peak.

Housing completions in England fell by 9% from the previous quarter to an estimated 36,600 (seasonally adjusted) in the June quarter 2008. Compared with the June quarter 2007, completions were down by 13%. Quarterly completions exceeded starts for the third quarter in a row.

Annual housing completions in England totalled 161,100 in the 12 months to June 2008, down by 4% compared with the previous year.

Download a copy of the statistics report

Shelter calls for £8bn house building boost

Shelter has called on the Government to immediately inject £8bn into building new homes to help kick start the flagging house building industry.

Ministers have already set aside £8bn to be spent over the next three years to build more than 100,000 social homes.

But Shelter Chief Executive Adam Sampson says there would be huge benefits for the economy if ministers spent the majority of the cash building the much-needed homes over the next year:

"Spending this £8bn now rather than over three years makes perfect economic sense. It would give the house building industry a huge boost, would save thousands of jobs, help the economy, deliver more than 100,000 desperately needed homes and allow the Government to meet its social house building targets."

to topLocal authorities to report on the quality of housing design

CABE this week issued a press release with regard to how the Building For Life (BFL) standards are to be used to monitor the quality of new developments by local authorities. It follows the publication in July of the CLG's ‘Regional Spatial Strategy and Local Development Framework: Core Output Indicators - Update'

Click here to view

This contains (page 19) a requirement for local authorities to assess any developments over 10 units against the BFL criteria, in response to recommendations in the Callcutt Review that housing design quality needs to be assessed. HBF will continue to work with CABE to look at how the industry can achieve the highest design standards possible, whilst ensuring housing delivery is not affected.

CABE press release:

Planners across the country must now use the Building for Life criteria to assess housing design quality. This is the first time that local authorities have been required to report each year on the design quality of the housing built in their areas.

The Government has published new core output indicators for regional planning bodies and local planning authorities to report on in their Annual Monitoring Reports. This includes the indicator for housing design quality required by PPS3. The indicator selected is the performance of each housing scheme against the 20 Building for Life criteria, which are jointly promoted by CABE (Commission for Architecture and the Built Environment) and the Home Builders Federation, the industry body representing the major residential developers.

Matt Bell, Director of Campaigns at CABE, commented:

"By making councils report against this indicator, there will in effect be a rolling housing audit. And the publication of performance against this measure will provide a powerful incentive for planners to understand the Building for Life criteria and the design principles that underpin them. It sends a very clear message to planners that quality is as important as speed and volume."