HBF Weekly News Summary Friday 5 February 2010

Friday, 5th February 2010

Top stories this week

Bank of England: Rates decision and lending to individuals December 2009.....read more  

BSA: Gross lending up 15% at building societies.....read more

Decisions on Feed-in Tariff (FIT) and consultation on Renewable Heat Incentive (RHI).....read more

NHPAU-commissioned report finds high degree of variability in time taken to get planning consent.....read more

Treasury consultation on the private rented sector.....read more

HBF to host housing "Question Time" featuring Healey and Shapps.....read more

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Economic news

Bank holds rates and quantitative easing

At its monthly meeting yesterday, the Bank of England's Monetary Policy Committee voted to maintain the official Bank Rate paid on commercial bank reserves at 0.5%. The Committee also voted to maintain the stock of asset purchases (quantitative easing) financed by the issuance of central bank reserves at £200bn.

In its accompanying statement, the Bank said: "On balance, the Committee believes that the prospect is for a gradual recovery in the level of activity. The recession has probably impaired the supply capacity of the economy, but the scale and persistence of the fall in output means that a substantial margin of under-utilised resources is likely to remain for some time to come. That is likely to mean that inflation will fall below the target for a period."

It added: "The Committee will continue to monitor the appropriate scale of the asset purchase programme and further purchases would be made should the outlook warrant them."

Click here to read the full statement

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Bank of England: Lending to Individuals December 2009

The Bank of England reported this week that total net lending to individuals rose by £1.2bn in December. The twelve-month growth rate remained at 0.7%. The three-month annualised growth rate was 0.8%, a 0.1 percentage point increase on a revised 0.7% for November.

Within the total, net lending secured on dwellings increased by £1.2bn, below the revised November increase of £1.6bn, but above the previous six-month average of £0.9bn. The twelve-month growth rate was 0.9%, a fall of 0.1 percentage points from a revised 1.0% for November. The three-month annualised growth rate remained at 1.2%. Within total secured lending, secured lending by banks (excluding the effects of securitisations) increased by £3.0bn, below the revised November increase (£3.9bn) but slightly higher than the previous six-month average of £2.9bn. The number of loan approvals for house purchase (59,023) was slightly lower than the November figure (60,045) but above the previous six-month average (55,004); approvals for remortgaging (27,276) were higher than in November but remained below the previous six-month average. The number of loans approved for other purposes (26,666) was lower than both the November figure and the previous six-month average.

Consumer credit increased by £0.1bn, above the previous six month average of a net repayment of £0.3bn, and the first increase since June 2009. Credit card lending increased by £0.2bn but other loans and advances fell by £0.1bn. The annual growth rate of consumer credit remained at -0.5%; the three-month annualised growth rate increased to -1.5%.

http://www.bankofengland.co.uk/statistics/li/2009/dec/index.htm" target="_blank">Read more

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CML reaction to latest Bank of England figures

The CML commented that the gross mortgage lending total of £13.4bn in December 2009 was in line with the CML's estimate (£13.5bn) and seems to confirm the CML's view that much activity was "rushed through" to beat the stamp duty deadline. Gross lending totalled £143.5bn in 2009.

Net lending remains up from the near stagnation in the middle of the year. For 2009 as a whole net lending totalled £11.5bn. This was the lowest level on record (back to 1987), but higher than the earlier CML forecast of £8bn. This outcome was largely driven by the relative strength of house purchase activity, which picked up over the latter part of the year, and weak levels of repayments. The CML sees little if any evidence that households, in aggregate, are using low interest rates to pay down mortgage debt more quickly.

CML Economist Paul Samter said:

"These figures confirm that the mortgage market ended 2009 in much better shape than it started, but it still looks like a slow haul back to meaningful levels of activity. It should be no surprise if January and February this year appear particularly slow, if we are correct in our view that many buyers rushed to beat the stamp duty concession deadline in December."

http://www.cml.org.uk/cml/media/press/2536" target="_blank">Read more

BSA: Gross lending up 15% at building societies

Gross mortgage lending by building societies was £1.8bn in December, compared to £1.6bn in November, an increase of 15%, according to the latest data from the Building Societies' Association. Gross lending for 2009 totaled £18.6bn compared to £37.5bn in 2008. Commenting on the lending figures, Paul Broadhead, BSA Head of Mortgage Policy, said:

"Whilst it is encouraging to see an increase in gross lending at the end of the year when activity would typically decline, we believe it is likely that this rise can be attributed to a rush from buyers keen to complete transactions before the year end in order to beat the removal of the stamp duty holiday. Despite this rise, total gross lending in 2009 was only half of that in 2008 and it is likely to remain at low levels until funding conditions improve."

Other key findings include:

Net lending by building societies in December 2009 was -£283m compared to £273m in December 2008;

Approvals in December 2009 were £1,038m compared to £901m in December 2008;

Building societies had net withdrawals of £354m in December 2009 compared to net receipts of £897m in December 2008;

Building societies had a net withdrawal of £10m from Cash ISAs in December 2009, compared to net withdrawal of £212m in December 2008.

http://www.bsa.org.uk/mediacentre/press/monthly_figures_january2010.htm" target="_blank">Read more

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Housing market news

House price indices

Halifax house price index

The Halifax house price index, published this week, reported that:

House prices increased by 0.6% in January. Prices rose for the seventh consecutive month, but January's rise was the lowest during this period and was significantly below the 1.1% average over the previous six months;

Prices have risen by 9.9% since reaching a low in April 2009; an increase in the average price of £15,287 over this period. This follows a decline of 23% between August 2007 and April 2009. The average house price is now £169,777;

House prices in January were 3.6% higher on an annual basis. This is the largest increase in the annual rate of change - measured by the average for the latest three months against the same period a year earlier - since February 2008. The comparable rate a year ago was -17.2%;

Housing market activity continues to pick up albeit from a low base. House sales in England and Wales in October were 34% higher than a year earlier, according to the latest Land Registry figures. Bank of England industry-wide figures show that the number of mortgages approved to finance house purchase - a leading indicator of completed house sales - in the final three months of 2009 was significantly up on the number in the same period a year earlier (176,517 against 91,221). This was despite a marginal monthly fall (-1.7%) in December; the first decline since November 2008. Approvals were still 22% lower than in December 2007;

Low mortgage rates have reduced the burden of servicing mortgage debt. Nationally, typical mortgage payments for a new borrower have fallen from a peak of 48% of average disposable earnings in 2007 Quarter 3 to 32% in 2009 Quarter 4;

Low supply of properties for sale has been another factor pushing up house prices. There are, however, some signs that the improvement in market conditions since last spring is leading more homeowners to try to sell their property. Instructions to sell increased for the seventh successive month in December, helping to increase the stock of properties available for sale. (Source: RICS monthly survey, December 2009.)

http://www.lloydsbankinggroup.com/media/pdfs/research/2010/HousePriceIndexJan2010.pdf" target="_blank">Read more

Nationwide house price index

The latest Nationwide house price index reported that the average house price rose by 1.2% in January, from £162,103 in December to £163,481, this represents an increase of 8.6% year-on-year. Commenting on the figures Martin Gahbauer, Nationwide's Chief Economist, said:

"House prices strengthened their upward momentum at the start of 2010, increasing by a seasonally adjusted 1.2% month-on-month in January. The 3 month on 3 month rate of change - usually a smoother indicator of the near term trend - dipped slightly from 2.3% in December to 2.1% in January, but this primarily reflects the smaller price increases recorded in November and December. At £163,481, the average price of a typical UK property cost 8.6% more than a year earlier in January, up from 5.9% in December. Unless there is a fall in property values in February, annual house price inflation is likely to move into double-digit territory next month for the first time since May 2007.

"Over the course of the last month, there were several important pieces of economic news with relevance for the housing market. The news that the UK economy finally emerged from recession in the fourth quarter of 2009 was in many ways a mixed bag. Although it is clearly encouraging that economic activity is no longer falling, it remains a long way below the pre-recession level and is not yet growing convincingly. Although there may still be some upward revisions to the initial estimates of economic growth, this won't change the fact that the rebound in the housing market - and particularly house prices - has gone some way beyond the recovery in the overall economy. This is a reversal of the picture in 2007-2008, when the housing market deteriorated much more quickly and at an earlier point in time than the wider economy. "

http://www.nationwide.co.uk/hpi/historical/Jan_2010.pdf" target="_blank">Read more

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Hometrack: House prices up across just 7% of the country

According to Hometrack's latest market commentary overall house prices rose by 0.1% in January while the year on year rate of growth currently stands at -0.1%. January's survey reveals a sluggish start to the year as the market shrugs off the usual seasonal effects after an unexpectedly strong end to 2009.

January saw a decline both in the number of new sales agreed and in buyer registrations - the average time to sell posted its first monthly increase for 12 months, growing to an average of 8.6 weeks. The volume of housing for sale also continued to decline and this has been a key factor in supporting price rises. During January, prices rose in three regions of the country - Greater London, the South East and the South West. Prices remained static in all other areas.

The average price of property in rising markets - and these represent just 7% of postcodes - is 35% higher than that of the national average (£212,000 compared to £157,000). This highlights how pockets of the market, where scarcity of supply and equity fuelled demand, are creating upward pressure on prices. The firmer pricing in the market today may well deter continued interest.

Hometrack say high value property in better off areas is resulting in a skew in transactions. This in turn has in their view led to the general health of the housing market being overstated especially when set against the backdrop of an economy emerging out of recession. They see the market bounce-back of 2009 as distinctly one dimensional and the outlook for 2010 as less certain.

Improvement in both market activity and prices over 2009 means 2010 is starting from a higher base than 12 months ago. Today the proportion of the asking price being achieved is 93.5% compared to 88% at the start of 2009.

http://www.hometrack.co.uk/commentary-and-analysis/house-price-survey/20100201.cfm" target="_blank">Read more

Land Registry house price index

The Land Registry reported that December's data shows the first positive annual house price change since May 2008. The figure now stands at 2.5%.

The monthly change is 0.1%, which is the eighth month in a row in which the monthly change has been above zero. This brings the average property value in England and Wales to £161,783.

The number of sales per month has increased since last year, with an average of 58,000 transactions between July 2009 and October 2009, compared to an average of 46,655 in the same period a year before

Key regional observations:

Seven regions in England and Wales experienced increases in their average property values over the last 12 months;

The region with the highest annual price change is London with an increase of 6.1%;

The region with the most significant annual price fall was Wales with a movement of -2.5%;

Both the North East and the West Midlands experienced the greatest monthly rises with movements of 1.9%;

Wales was the region with the most significant monthly price fall with a movement of -2%.

http://www1.landregistry.gov.uk/assets/library/documents/HPIRepcardidec09.pdf" target="_blank">Read more

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Zero Carbon Hub proposes new national marketing campaign for zero carbon homes

New proposals announced this week by the Zero Carbon Hub and Energy Saving Trust call for a new marketing strategy for zero carbon homes. The new strategy will address concerns that some zero carbon homes appear experimental and unappealing to the majority of homebuyers.

Among ten recommendations in the "Marketing Tomorrow's New Homes" report are proposals to:

Develop a national new homes marketing campaign to stimulate customer demand for low and zero carbon homes and move them from the ‘exemplar' to the ‘mainstream';

Create the bigger picture for new sustainable homes - a concept and proposition that consumers understand and value;

Ensure consistent marketing messages based on real-life benefits are used by developers and government;

Ensure zero carbon homes are not 'marginalised as green' by marketing them as special items so that sustainable features are simply integrated across the developers portfolio;

Create an environment of constant innovation rather than radical changes, encouraging a drip-feed of green features across the entire housing stock so that high performing homes become the ‘new normal'.

According to the report, homebuyers don't currently understand the zero carbon proposition, they are wary of the political or publicity motivations behind the promotion of green developments, and are unwilling to pay for sustainable features which they consider as expensive and unproven in the broader housing market.

This lack of consumer buy-in is contributing to an image of zero carbon homes as experimental and futuristic, which discourages consumers, reduces demand and hinders market growth.

Responding to the report, David Pretty CBE, Chairman New Homes Marketing Board said:

"This is a very important first step in understanding how we market the significant benefits resulting from the work the industry has put in to developing reduced carbon homes. The NHMB is fully committed to working with the industry to ensure that the very real benefits of today's new homes are fully understood by potential customers."

http://www.zerocarbonhub.org/resourcefiles/ZCH_Marketing_Tomorrows_New_Homes_Report_Final.pdf" target="_blank">Read more

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Industry news

DECC: final decisions on Feed-in Tariffs (FITs)

Energy and Climate Change Secretary Ed Miliband this week announced the Government's decisions on Feed-in Tariff (FITs) levels following last year's public consultation on this new financial incentive for small-scale renewable electricity installations. Under the FIT scheme households and communities who install generating technologies such as small wind turbines and photovoltaic panels will from 1st April be entitled to claim guaranteed payments for the low carbon electricity they produce.

Eligible technologies up to 5 megawatts generating capacity will be paid for the electricity they generate, even if they use it themselves. The level of payment depends on the technology and will be increased in line with RPI inflation.

Eligible technologies will also get a further payment of 3p per kWh for any electricity they feed into the grid.

The Government has confirmed that future new low and zero carbon homes using micro-generation will qualify for FITs and that householders may assign the revenue from these to other parties by contract. This follows HBF representations that this coverage should be provided.

http://www.decc.gov.uk/en/content/cms/news/pn10_010/pn10_010.aspx" target="_blank">Read more

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Consultation on the Renewable Heat Incentive (RHI)

The Government this week published a consultation on the introduction of a Renewable Heat Incentive (RHI) scheme, which it aims to introduce in April 2011. The consultation seeks views on the proposed scheme. The deadline for responses to this consultation is Monday 26th April. Details about submitting a response, including the relevant e-mail and postal addresses, can be found in the ‘How to Respond' section of the consultation document. For information and queries, please contact mailto:rfi@decc.gsi.gov.uk">rfi@decc.gsi.gov.uk<>

The Renewable Heat Incentive (RHI) will provide financial support for those who install renewable heating at all scales, which qualifies for support under the scheme.

The proposals have been developed with input from stakeholders - including the energy industry trade associations, Ofgem and NGOs - and this consultation constitutes a more formal opportunity for all interested parties to have their say on the details of the RHI mechanism.

In view of the relevance of the proposed incentive to the delivery of the zero carbon homes policy, the HBF will wish to respond to the consultation and work with members to develop our submission. Please contact Rosie Hinchliffe - housingdebatead@smith-institute.org.uk

mailto:housingdebatead@smith-institute.org.uk">housingdebatead@smith-institute.org.uk</a></p><h2><a name="tp_6" title="tp_6"></a>HBF to host housing &lsquo;Question Time&#39; featuring Healey and Shapps </h2><p>10th March, Westminster</p><p>The HBF&#39;s Policy conference will this year be a pre-election &lsquo;Question Time&#39; style debate featuring the main housing political heavyweights. Housing Minister John Healey and his Tory shadow Grant Shapps will take part in an open debate to be chaired by HBF Executive Chairman Stewart Baseley. The Lib-Dems are also expected to field a representative.</p><p>Questions will be taken from the assembled delegates on the key housing issues in what is sure to be a heated and fascinating debate with the General Election looming.</p><p>It will be followed by a debate featuring an expert panel of leading economists, including Citigroup&#39;s Michael Saunders and Capital Economics Ed Stansfield which will look at the prospects for both the housing market and the general economy.</p><p><a href="http://www.house-builder.co.uk/documents/HBFPOLICY10-BF.pdf" target="_blank">Please click here to download a booking form</a></p><p><a href="http://www.house-builder.co.uk/conferences_and_events/show_event/?event_id=73" target="_blank">Please click here to visit the website and to book online</a></p><h2>Housing Lecture 2010: Labour&#39;s Agenda</h2><p>Tuesday 23rd March 2010</p><p>The New Homes Marketing Board and the Centre for Social Justice are hosting an event in association with the Smith Institute that will look at Labour&#39;s housing policy proposals.</p><p>Speakers will include the NMHB chair David Pretty (CBE); Rt. Hon. John Healey MP, Housing Minister,</p><p>It will be chaired by Paul Hackett, Director, The Smith Institute.</p><p>The event will run from 1800-1930 and be followed by a drinks reception</p><p>Limited spaces available, to request a space please email <a href="housinglecturead@smith-institute.org.uk