HBF Wales Weekly News Summary Friday 12 June 2009

12 June, 2009

Friday, 12th June 2009

Top stories this week

HBF discussions with Ministers and the Conservative front bench team......read more

New orders in the construction industry, April 2009.....read more

HCA announce expressions of interest in investment in private rented housing.....read more

RICS UK housing market survey, May 2009.....read more

CLG: House Price Index - April 2009.....read more

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Housing market news

Government and political news

Wales news

Towards a new Welsh economy: The Deputy First Minister outlines priorities for a stronger, more sustainable future

Keeping viable businesses trading; providing extra support for small companies; investing in innovation, research and commercialisation; helping businesses to become more competitive; tackling inactivity through regeneration, and investing in a progressive agenda for transport.

These are some of the key priorities of the Welsh Assembly Government as the foundations are laid for a more sustainable and prosperous Welsh economy, the Deputy First Minister and Minister for the Economy and Transport Ieuan Wyn Jones told Assembly Members this week.

The Minister was keen to emphasise however that his department was continuing to explore ways of assisting SMEs and announced an extension the Single Investment Fund to help smaller companies and start-ups with the potential to grow. This will provide smaller enterprises with access to revenue support grants of up to £10,000 and capital grants from £5,000-£10,000.

New House Building in Wales, January to March 2009

The latest National Statistics on new house building produced by the Welsh Assembly Government were released this week according to the arrangements approved by the UK Statistics Authority. Statistics on the number of new dwellings started and completed include data for Wales for the period January to March 2009, as reported by local authorities. The latest release updates the statistics previously released on 11th March 2009.

The key points from the latest release are:

Starts

During the January to March quarter 2009, 1,005 new dwellings were started;

The number of starts has increased by 323 (47%) from the previous quarter and decreased by 811 (45%) from the same quarter of the previous year;

The private sector accounted for 802 new dwellings started, some 80% of all activity. The remaining 203 dwellings were started by registered social landlords. There were no dwellings started by local authorities;

During the quarter, the highest numbers of starts across all tenures were seen in Newport and Powys, whilst Merthyr Tydfil and the Isle of Anglesey saw the lowest number of starts.

Completions

1,474 dwellings were completed during the January to March quarter 2009;

The number of completions decreased by 220 (13%) from the previous quarter and decreased by 346 (19%) from the same quarter of the previous year;

1,259 dwellings (85%) were completed by the private sector. The remaining 215 dwellings were completed by registered social landlords. There were no dwellings completed by local authorities;

The highest number of dwelling completions, across all sectors, was seen in Cardiff and Swansea whilst the lowest were seen in Ceredigion and the Vale of Glamorgan.

Household Projections for Wales (2006-Based)

The latest National Statistics on Household Projections produced by the Welsh Assembly Government were released on 11th June 2009 according to the arrangements approved by the UK Statistics Authority.

Statistics on Household Projections include data for Wales for the period 2006 to 2031. The latest release updates the statistics previously released on 14th March 2006.

The key points from the latest release are:

The total number of households in Wales is projected to grow to nearly 1.6m;

On average, the total number of households in Wales is projected to increase by 1% per year;

The average household size in Wales is projected to decrease from 2.30 persons to 2.03 persons;

Single parent households of all types are projected to increase by 70% compared to 2006;

Overall numbers of households with 4 or more persons are projected to decrease by 20% compared to 2006;

Total household numbers are projected to increase for all local authorities in Wales. Increases are projected to vary between 10% in Merthyr Tydfil to 36% in Carmarthenshire.

Sharp rise in cost of fixed-rate mortgages predicted

Expected increases in the cost of fixed-rate mortgages are a sign of the growing recovery in the housing market, Welsh experts claimed this week.

Banks and building societies are considering the hikes only because they know the anticipated upturn is strong enough to absorb them, according to industry analysts.

Swap rates, upon which fixed-rate deals are based, have risen sharply since the middle of last month and a round of re- pricing among lenders is expected in the week ahead.

Cardiff University economist Professor Patrick Minford said the increasing costs of fixed-rate deals were a “symptom of recovery”. He said:

“Everyone was gloomy some months back, but now everything has changed. There are quite clear signs of recovery.”

Melfyn Williams, a former president of the National Association of Estate Agents, also believes increases in fixed-rate deals are a sign of confidence amongst lenders.

HBF News

HBF seeks meeting with new Housing Minister

HBF had initial contact with new Housing Minister John Healey this week during a meeting of the Zero Carbon Task Force. We are also seeking an early bilateral meeting with Mr Healey to discuss the current main issues affecting housing delivery.

In the junior Ministerial reshuffle that was completed early this week, Iain Wright has left CLG and Mr Healey will be assisted on housing and planning issues by Ian Austin, one of a number of new entrants to the CLG ministerial team. At the time of going to press, it has not yet been clarified whether Mr Austin or another member of the ministerial team will have responsibility for building regulations.

HBF holds further discussions with the Conservative front bench team

As the countdown to the next General Election begins following the Cabinet reshuffle, HBF is holding a series of further meetings with the Conservative Party’s front bench CLG team. HBF and a number of senior members discussed Conservative policy thinking with Shadow Secretary of State for Communities, Caroline Spelman, this week. Next week meetings are scheduled with Shadow Housing Minister Grant Shapps to present HBF’s analysis and thinking on the impact of regulation on housing delivery and with Bob Neill who is leading work on the Conservatives’ further policy green paper on planning and regeneration due to be published later in the summer.

Housing and the Credit Crunch: Uncorrected transcript of oral evidence

The minutes of the Select Committee Evidence Session regarding Housing and the Credit Crunch, at which John Stewart, HBF Director of Economic Affairs, gave evidence, were published this week.

Click here to download a copy of the minutes

Delivering energy provision in sustainable development

Davies Arnold Cooper LLP & the Home Builders Federation (HBF) are holding a seminar on delivering energy provision in sustainable development on the morning of 14 July in London. The seminar will include a Question and Answer session with a leading panel of experts. The seminar will cover essential guidance and will include the following:

Regulation – zero carbon consultation, what is coming on the horizon?

Delivery – what works and on what scale?

Legal

What are the challenges in blending energy delivery and housing?

Delivery: limitations of the property law system, how to extract maximum value

Consumer choice: implications of Citiworks

The ESCO and Consultants’ perspective – what developers need to know.

Click here for further information and booking details

Industry news

New orders in the construction industry, April 2009

The Office of National Statistics published the statistics detailing orders in the construction industry for April 2009. According to the publication orders in the three months to April 2009 fell by 9% compared with the previous three month period. Orders in the 12 months to April 2009 fell 29% compared with the previous 12 months and orders in three months to April 2009 fell by 38% compared with the same period a year earlier.

Private housing orders in the three months to April 2009 fell by 2% compared with the previous three month period, and fell by 42% compared with the same three month period a year earlier. Private housing orders in the year to April 2009 fell by 48% compared with those in the previous 12 months.

Public housing and housing association orders in the three months to April 2009 rose by 45% compared with the previous three month period, but fell by 5% when compared with the same three month period a year earlier. Public housing and housing association orders fell by 16% in the 12 months to April 2009 compared with the previous 12 months. All comparisons in this sector are affected by large variations due to its relatively small size.

HCA announce expressions of interest in investment in private rented housing

The Homes and Communities Agency announced that its new initiative which it hopes could see hundreds of millions of pounds worth of new investment flow into the private rented housing sector has received 64 expressions of interest,.

The HCA’s Private Rental Sector Initiative (PRSI) is designed to attract institutional investors, such as UK pension and overseas funds that have not traditionally been involved in residential letting, into the market at scale for the first time. Used to fund the building of new homes specifically for private rent, it could help relieve pressure on the housing market by kickstarting stalled developments, as well as make private rental an option of choice for consumers in the future.

Submissions to the expression of interest process, launched by the HCA last month, have been received from household name UK pension funds and other investors, property developers, fund managers, housing associations and property managers. The HCA and its advisor DTZ are now evaluating the submissions with a view to encouraging organisations to come together to create investment propositions with scale. Chief Executive of the HCA, Sir Bob Kerslake, said:

“This response, and the sector’s wider support for our initiative, has validated the early market testing which told us there is an opportunity here to do something different.

“To maintain momentum and make the most of the current favourable market conditions we now intend to move quickly to take these submissions to the next stage, evaluating deliverability and the value for money they offer, and in particular to encouraging parties to come together. We will also step up our work to identify a pipeline of product for investors – homes on HCA schemes and other developments across the country."

RICS expands valuation guidance to meet needs of turbulent market

Advice on valuing property in a rapidly changing market was published today by RICS (The Royal Institution of Chartered Surveyors). It recognises that in the current economic climate there may be a need for valuers to provide advice on the outlook of a property’s value, as well as establishing the current market value.

The valuation information alert sets out clear guidance on how to carry out such valuations. It is aimed at the commercial property market and will supplement and clarify the existing standards set out in the Red Book.

It provides guidance to both valuers and lenders on the advice that can be provided when conducting loan security valuation reviews in circumstances when values are changing rapidly. In such situations a valuation can become out of date very rapidly and as a result a client, particularly a lender conducting a loan security review, may seek additional advice from the valuer. This is likely to focus not only upon the current market value, but also what it might be in the near future.

Click here to view a copy of the guidance

TSA invites discussion on proposed regulatory framework

From April 2010, the Tenant Services Authority (TSA) will for the first time regulate all landlords of affordable housing including housing associations, ALMOs and local authorities. The TSA has published a discussion document on the proposed regulatory framework which outlines how t he TSA will regulate affordable housing and outlines a set of core national standards themed around:

The service offer to tenants

Tenant empowerment and involvement

Tenancy agreement

Governance

Viability

Value for money

Click here to download a copy of the discussion document

Housing market news

RICS UK housing market survey, May 2009

A further increase in both new buyer enquiries and sales, as well as a reduction in the level of stocks on surveyors’ books has begun to provide some support for property prices, says RICS’ UK housing market survey.

The number of Chartered Surveyors seeing an increase in new enquiries edged up again in May, with 48% reporting a rise rather than a fall, the seventh consecutive monthly gain. Sales also rose, albeit from very depressed levels, indicating that the increase in footfall of potential buyers was steadily improving activity in the housing market. The average numbers of properties sold over the past three months rose to 11.8, up from 10.6. At the same time the net balance of surveyors reporting a fall in house prices rose from a negative balance of 58.7 to 44.1%.

Meanwhile, new instructions were continuing to fall. As a result, the average number of properties on surveyors’ books has dropped in the past month to 58.4 from 69.4 (they have fallen by more than one third over the past year). The lack of new supply, coupled with the increase in activity, is now providing some support for house prices. This is being most visibly reflected in the sales-to-stock ratio, widely seen as a key indicator of market slack, which saw a sharp increase from 15.2 to 20.1%. Commenting, RICS spokesperson Ian Perry said:

“On the face of it, the housing market does appear to be close to bottoming out with activity picking up in a material way and prices at last stabilising. However it is important to remember that the lack of supply has been as important in underpinning prices as the rise in demand. Moreover, with the economic backdrop still quite uncertain, unemployment is set to continue increasing sharply and finance for first time buyers is still in short supply, there are a number of significant obstacles for the market to overcome over the coming months.”

CLG: House Price Index - April 2009

The latest UK house price index statistics produced by Communities and Local Government were released on Tuesday 9 June 2009.

The statistics include data based on mortgage completions during the month of April 2009.

The key points from the release are:

Between March and April there was a rise of 1.1 per cent in the index

As a result, UK house prices were 13.0% lower than in April 2008 (the equivalent figure for March was an annual fall of 13.6%);

The mix-adjusted average house price in the UK stood at £189,215 in April 2009 (not seasonally adjusted);

UK house prices fell by 3.0% in the quarter ending April 2009. This compares with a fall of 3.9% for the quarter ending January 2009;

Annual average house prices fell in England (-13.2%), Wales (-10.3%), Scotland (-8.6%) and Northern Ireland (-22.8%);

Annual average house prices paid by first time buyers in April 2009 were 16.0% lower than a year ago. By comparison average house prices paid by former owner occupiers were 11.9% lower.

CML: Borrowers switch back to fixes

Take up of fixed-rate products increased further as the interest rate cycle has now reached its floor, according to new data from the Council of Mortgage Lenders.

In April, 69% of borrowers took out fixed rate mortgages with an average rate of 4.83%, the highest share since June 2008.

There was a modest improvement in the number of loans for house purchase. However, activity was still very low by historical standards with 35,600 house purchase loans in April, compared to an average of 88,000 loans in April over the last seven years.

The number of loans for remortgage continued to decline as low reversion rates and stricter credit criteria for the best deals make refinancing less attractive. There were 31,000 remortgage loans in April, 22% down on March and 65% down on April last year. Gross mortgage lending in April was £10.5bn, down from £11.5bn in March.

There were 22,100 loans to home movers worth £3.1bn, compared with 30,600 loans worth £5bn in April last year. Lending criteria continued to edge down with a typical home mover putting down a 33% deposit and borrowing 2.63 times their income, compared with 30% and 2.69 in March.

There were 13,500 loans to first-time buyers worth £1.4bn, compared with 18,800 loans worth £2.4bn in April 2008. The average first-time buyer had a 25% deposit (unchanged since February) and borrowed 2.96 times their income (2.99 in March). The slowing rate of decline in these measures and the recent introduction of a number of higher loan-to-value products may indicate an easing in criteria in coming months’ advances.

Government and political news

Margaret Beckett a candidate for Speaker

Following her departure from the Government in last week’s Cabinet reshuffle, Margaret Beckett this week announced that she is standing as a candidate to be the new Speaker of the House of Commons. A number of other candidates have also put their names forward for the election which will be held in ten days’ time. discuss how to take the range of policy issues currently ongoing forward. It is rumoured that Mrs Beckett may be appointed Speaker of the House.

New Cabinet and Ministerial teams

Full details of the Cabinet and ministerial reshuffle were confirmed earlier this week.

Please click here to view the HBF member briefing regarding the Cabinet reshuffle

Please click here for the full list of current Ministerial appointments

Changes to the machinery of Government

The Government has created a new Department for Business, Innovation and Skills whose key role will be to build Britain’s capabilities to compete in the global economy. The Department will be created by merging BERR and DIUS.

This will “...create a single department committed to building Britain’s future economic strengths. To compete in a global economy and create the jobs of the future Britain requires a regulatory environment that encourages enterprise, skilled people, innovation, and world-class science and research.”

The new department is the institutional realisation of the approach to promoting UK competitiveness and productivity as set out in the New Industries, New Jobs paper of April 2009, produced jointly by BERR and DIUS.

The new department will aim to:

Advocate the needs of business across government, especially of UK small businesses;

Promote an enterprise environment that is good for business and good for consumers;

Design tailored policies for sectors of the UK economy that represent key future strengths and where government policy can add to the dynamics of the market;

Assess the changing skills needs of the UK economy and design policies to meet them through public and privately funded lifelong training;

Invest in the development of a higher education system committed to widening participation;

Continue to invest in the UK’s world class science base and develop strategies for commercialising more of that science;

Continue to invest in skills through the Further Education system to help people through the downturn and to prepare Britain for the future;

Deliver on the government’s objectives to expand the number of apprenticeships;

Encourage innovation in the UK;

Defend a sound regulatory environment that encourages enterprise and skills;

Collaborate with the RDAs in building economic growth in the English regions;

Work with the EU in shaping European regulation and European policies that affect the openness of the single market and the competitiveness of European and British companies

Continue to work to expand UK exports and encourage inward investment to the UK.

George Osborne: A New British Economic Model

In a speech to the Association of British Insurers this week, the Shadow Chancellor George Osborne said that "the model of economic growth pursued over the last ten years is fundamentally broken" and outlined plans for a "new British economic model".

He explained that the economic policy of a Conservative Government would be rooted in three priorities:

The immediate need to restore Britain's international credibility and preserve our credit rating by dealing with our huge budget defecit

The transition from an economy built on excessive debt to one built on savings and investment

Re-focussing our economy from the rush for short-term gains to the pursuit of long-term returns

He said, "If we follow these three priorities I believe we can do much more than simply survive this recession. We can emerge from it with a stronger, more geographically balanced, and more broadly based economy in which more of the British people feel they are sharing in its success."

Economic news

Bank of England Quarterly Bulletin 2009 Q2

The 2009 Q2 issue of the Bank of England Quarterly Bulletin was published this week. It contains an article on the economics and estimation of negative equity which states that:

“Negative equity occurs when the market value of a property is below the outstanding value of the mortgage secured on it. It only ever affects a minority of households — only 40% of UK households are mortgagors and many of those have small mortgages relative to the value of their houses. However, when house prices fall, the number of households in negative equity tends to rise. The housing market weakened significantly during 2008. The price of an average house was around 20% lower in the spring of 2009 than it had been at the peak of the housing market in autumn 2007; the largest fall in nominal house prices on record. This is likely to have resulted in an increased incidence of negative equity.

“The economic consequences of negative equity depend crucially on its extent. But there are no data which accurately measure the number of households who are in negative equity.”

The article does, however, present three estimates that suggest that around 7%–11% of UK owner-occupier mortgagors were in negative equity in the spring of 2009, although for most of those households, the total value of negative equity was relatively small.

Events

HBF Midlands AGM

Friday 12th June – Sketchley Grange Hotel, Hinckley, Leicestershire

The HBF Midlands Annual General Meeting and luncheon is being held at the Sketchley Grange Hotel, Hinckley, starting at 12.15 pm. This is an excellent chance for everybody working in the housing industry, at all levels, to review the previous year and forward plan for 2009, as well as networking with peers.

Please contact Marian MacDonald on 020 7960 1605 or marian.macdonald@hbf.co.uk for further details and booking information.

‘New homes week 2009’

The New Homes Marketing Board has announced that it is proposing to hold ‘New Homes Week 2009’ between 14th and 20th September.

Like the previous New Homes Weeks in 2005 and 2006, which proved extremely successful, the objective of the week will be to promote the new homes market by highlighting the benefits of new build homes, which will hopefully result in increased visitor levels to sites and thus drive sales.

It is imperative that the New Homes Marketing Board and the Home Builders Federation assist its members in every possible way to drive sales in such challenging trading conditions.

Last year it was felt that the environment was just too turbulent to justify such a campaign, and whilst clearly a challenging environment remains, increased consumer interest dictates that every option should be explored to convert that interest in to reservations.

The campaign will be driven predominantly through the local media, and the NHMB will be developing stories around set themes for each day of the week to generate public interest.

As well as developing an overarching strategy, NHMB will be looking to link up with members on a local and regional level, and to support them to develop their own initiatives/ events throughout the week.

In order that members are fully aware of the proposals it is requested that the relevant member of staff emails nhw2009@hbf.co.uk and further details will be sent out shortly.

Housing Market Intelligence Conference – Savoy Place, London

Tuesday 13th October 2009

The industry’s leading business strategy and planning conference and launch of the seventh annual Housing Market Intelligence Report. A booking form will shortly be available but for further information please contact the events team on 020 7960 1646 or visit www.house-builder.co.uk

The Housebuilding Innovation Awards – Millennium London Mayfair

Thursday 5th November 2009

The industry’s most sought after and prestigious awards will this year be presented at a glittering black tie event on Thursday 5th November. The shortlist will be announced on Wednesday 1st July and tickets will shortly be available to book. For further information please contact the events team on 020 7960 1646 or visit www.house-builder.co.uk

HBF Annual Planning Conference 2009

Planning viability - September 2009

In the current economic crisis much has been discussed about fiscal policy and incentives but what of planning policy in these challenging times? Is it business as usual or is the current model broken? The 2009 HBF Planning conference will seek to address this and more.

Date and venue details will be available on our website next week www.house-builder.co.uk, register now to receive all up to date information as it’s released, or contact kellie.kent@house-builder.co.uk.

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/

Rosie Hinchliffe

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