HBF Wales Weekly News Summary Friday 15 August 2008

Top stories this week *Bank of England's August inflation report *Communities and Local Government: House price index June 2008 *HBF take part in Conservative party housing seminar

Top stories this weekBank of England's August inflation report....read more

Communities and Local Government: House price index June 2008.....read moreHBF take part in Conservative party housing seminar.....read moreQuick LinksWales NewsEconomic NewsHousing Market NewsGovernment NewsIndustry NewsHBF NewsEventsWales NewsSEWTA releases draft Regional Transport Plan for consultation

The South East Wales Transport Alliance (SEWTA) has released its draft Regional Transport Plan (RTP) for consultation.

The plan is available on the SEWTA web site below and comments should be submitted by 30 September 2008.

Read the plan

The south Wales valleys could be drastically improved if the region had a democratically elected mayor, according to new research.

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Deputy Minister for Regeneration Leighton Andrews has announced today (8 August 2008) that five Communities First areas in Blaenau Gwent are set to receive funding of over £1.1m.

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The Bank of England's August Inflation Report presents a gloomy economic backdrop to the housing market for the next 12 months.

The Bank expects an even sharper economic slowdown than predicted in its May forecast, with a sharp fall in residential investment dragging down GDP growth, and falling real household incomes cutting consumer spending growth. In addition, inflation is expected to be even higher than predicted in May.

However some economic commentators have taken the Bank's predictions, and remarks made by the Governor Mervyn King, as a signal that the MPC is unlikely to raise interest rates because the economic slowdown now makes it less likely that inflationary pressures will become embedded in wage and pricing behaviour. While the Inflation Report warns that inflation may turn out even higher than currently predicted, it also accepts that the economic slowdown could become even more severe, so that inflation could eventually fall below the target.

At his press conference, the Governor appeared to firmly rule out extending the Special Liquidity Scheme to new mortgages, arguing that the problem was a shortage of funds not a shortage of liquidity. However newspaper reports suggest the Treasury is still considering some form of initiative to increase the flow of mortgage funds as part of an economic rescue package in its Pre-Budget Report (PBR) due in the autumn.

Alistair Darling's 2007 PBR was published on 9 October, much earlier than when Gordon Brown was Chancellor and they tended to appear in November or December. But with the ongoing furore over well-informed press speculation that the Government will announce some form of stamp duty holiday in its autumn housing market package, there must be considerable pressure on the Treasury to publish the 2008 PBR as early as possible.

Download a copy of the Bank of England's Inflation Report

The Council of Mortgage Lenders (CML) is maintaining its forecast of 45,000 total possessions and 170,000 mortgages in arrears of more than three months by the end of the year.

The CML numbers relate only to first mortgages, not to other consumer loans secured on people's homes.

The possession rate - the proportion of all mortgages on which possession occurred in the period - was 0.16% in the first half of the year, up from 0.11% in both the first and second halves of 2007. The possession rate now is similar to that of the late 1990s, but remains less than half the rate experienced in the early 1990s.

By number, there were 18,900 cases where lenders took possession of property in the first half of the year. This compares with 13,400 in the second half of 2007, and 12,800 in the first half of 2007.

On arrears, the total number of households with arrears of three months or more was 155,600 at the end of the first half of the year, up from 129,600 at the end of 2007 and 120,800 at the end of the first half of last year. The arrears rate stood at 1.33% of all mortgages, up from 1.10% at the end of 2007 and 1.02% at the end of the first half of last year.

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The latest UK house price index statistics produced by Communities and Local Government were released on Tuesday 12 August 2008.

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

Download a copy of the Index

The average number of transactions per surveyor fell further in July as a lack of mortgage finance continued to weigh heavily on the market. However, in its UK housing market survey published this week, RICS says sales expectations have improved, driven by sellers beginning to offer more realistic asking prices.

The RICS house price balance improved slightly for the third consecutive month but still remains at a significantly low level. 83.9% more chartered surveyors reported a fall than a rise in house prices, a decrease from 86.9% in June. The inability of many to secure mortgage finance is reflected in the collapse in transactions. The average number of transactions per surveyor (over the last three months) is now at 14.4, the lowest figure since the survey began, and the net balance of newly agreed sales remains in negative territory.

Commenting, RICS spokesperson Ian Perry said:

"The lack of mortgage finance has brought the housing market to a virtual standstill with first-time buyers rapidly becoming an endangered species. Going forward, there are signs that sales activity might pick up a little as sellers start to re-evaluate unrealistic asking prices. However, the current confused messages from the Government regarding stamp duty risks damaging any returning confidence and may discourage mobility."

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Download a copy of the RICS UK Housing Market Survey

The average homebuyer put down a 22% deposit in June, up from 20% in May, according to the Council of Mortgage Lenders. The majority of lending continues to be on conservative terms, as lending criteria have tightened in response to the shortage of funding and current market conditions.

The average first-time buyer borrowed 3.33 times their income, down from 3.35 in May. While the average home mover borrowed 2.94 times their income, down from 2.97 in May.

There were 18,100 loans to first-time buyers in June worth £2.3bn, an 8% decline in volume and 9% decline in value from May. There were 29,100 loans to home movers worth £4.7bn, down 9% in volume and value from May. The share of house purchase loans to first-time buyers and home movers remained stable at 38% and 62% respectively.

CML head of research, Bob Pannell commented:

"Mortgage lending activity remains relatively weak and will decline further in the coming months as a result of funding constraints and lower consumer demand.

"The majority of lending continues to be to people with larger deposits, which is prudent for borrowers and lenders in a slowing housing market."

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A survey of members conducted by the National Association of Estate Agents (NAEA) on recent speculation about a possible stamp duty holiday produced a large response with over 1350 replies.

The results indicate that 25% of agents claim a sale has fallen through as a direct result of the Chancellor's comments on this issue last week. 92% of agents believe the Chancellor's remarks have increased consumers concerns. When asked ‘have any applicants asked whether they should buy now or wait to see what the Chancellor says in the Autumn Pre-Budget Statement', 75% of respondents stated ‘yes' whilst only 25% of agents said ‘no'.

Peter Bolton King, Chief Executive of the NAEA commented:

"Instead of the Government formulating a careful plan outlining their thoughts clearly and concisely with a clear time frame in mind, this comment was simply made off-the-cuff. This is not particularly helpful in the current climate. It seems that there had been little regard to how this speculative comment might impact on what is already a delicate market. These figures clearly show the effect that this ‘loose' statement has had on consumers and the property market as a whole, none of which are encouraging."

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The Government has published its draft Heritage Protection Bill. It contains a series of major reforms to the heritage protection system in England and as such should be noted by members. If enacted, the bill will repeal all the substantive legislation on which the current system of heritage protection is based. A briefing for HBF members, detailing the key changes with an analysis of the implications will be circulated next week.

Download a copy of the draft Heritage Protection Bill

Policy Exchange, the right leaning think-tank, this week published its report on the effectiveness of regeneration policy in the UK. The report controversially concludes that regeneration efforts should be abandoned in the north of England where there are few jobs, and resources reallocated instead to aid expansion in the South East. The report advocates a significant liberalisation of land use in London and the South East. As the report states on page 35:

"It is likely that Britain faces three choices. We can constrain development in London and the South East, leading to much higher house prices in these areas, and to Britain being poorer overall. We do not support that vision of Britain. Alternatively, we can build more densely on the land that we have set aside for development, so that many people live in London in very small flats. Again we do not find that vision appealing. That leaves the third option: a significant expansion in the amount of land allocated to housing."

Download a copy of the report

It has been drawn to our attention that there is some discussion amongst local planning authorities over the implications of European Union procurement rules and the delivery of infrastructure under S106 agreements. Projects over the value of 3m Euros must under EU rules be open to competition, which is clearly not the case where such infrastructure is provided under the terms of a S106 agreement.

HBF is discussing this rather worrying development with the Advisory Team for Large Applications (ATLAS) who raised this issue following an inquiry from a local authority. ATLAS and the authority concerned are currently seeking further advice from CLG but any information or experience members may have regarding this issue would be gratefully appreciated. Please forward any comments to Andrew Whitaker, HBF Head of Planning at andrew.whitaker@hbf.co.uk.

Click here for further information

HBF was invited to take part in a private housing seminar with David Cameron and other members of the Conservative Shadow Cabinet this week (as reported in the Financial Times on Wednesday). Amongst other issues, the seminar considered the current mortgage finance position and the impact that this is having on the industry and the wider economy.

HBF members joined Government officials, ConstructionSkills and other stakeholders at a seminar in London this week. It was to discuss action to safeguard existing apprenticeships and skills in the current climate and to consider possible means of meeting skills needs for a future market recovery. The results of the seminar will inform the agenda for a proposed cross-departmental Ministerial summit on skills for the industry in the autumn.

London members should be aware of the forthcoming London Housing Capacity Study 2009. The study will incorporate the PPS3 requirements to carry out a SHLAA. The CLG has advised all London boroughs to cooperate in the study to qualify for additional Planning Delivery Grant. Most London boroughs will be relying on this study as their primary data source for their own strategic housing land supplies. The study will identify for assessment all sites down to 0.25 ha in size. The GLA survey element is then meant to be augmented by borough level studies assessing sites smaller than this.

The HBF has some reservations about the study, principally its over-reliance on windfalls in the first ten years of the London Plan period, and the suggestion that this study should obviate the need for detailed borough level SHLAAs. However, the GLA study is being driven by a political agenda: namely a concern within the GLA that left to their own devices, boroughs could assess too conservatively their capacity to accommodate additional housing in the period running up to 2026.

Members are strongly encouraged to promote their sites through the GLA study. If they have sites they wish to promote they should initially register these with the GLA by contacting the project manager, Chris Poulton, at Chris.Poulton@london.gov.uk.

If you would like more details contact James Stevens on 020 7960 1623 or email him at james.stevens@hbf.co.uk.

Wednesday 10 September - The Kassam Stadium, Oxford

This year's conference will discuss the combined challenges of climate change and the new planning act. The day is designed to provide delegates with both vital knowledge from the plenary sessions and practical guidance through our interactive workshops on the Community Infrastructure Levy and the PPS1 supplement on climate change.

For further information please contact the events team on 020 7960 1646 or events@hbmedia.co.uk

Wednesday 15 October - Savoy Place, London

The annual Housing Market Intelligence conference is the house building industry's leading event for discussion of the strategic and macro issues facing house builders and is a must for anyone involved in the business of house building.

For further details please contact the events team on 020 7960 1646 or events@hbmedia.co.uk

Thursday 23 October - Millennium Mayfair Hotel, London

Now in their fourth year, the Awards have become firmly established as the most coveted accolade in the UK house building industry. These awards recognise innovation among house builders and their suppliers in categories including ‘best sustainability initiative', ‘best innovation in technology' and ‘best initiative to first-time buyers/ key workers'. The glittering black tie event will this year be hosted by John Humphrys and takes place on 23 October in London.

For further information visit www.hbmedia.co.uk or take advantage of the early booking discount before 22 August, by contacting the events team on 020 7960 1646 or events@hbmedia.co.uk.

Wednesday 12 November, University of York

This year has seen the Government propose major changes to the way that Building Regulations are enforced. With many regulations under consultation, it is important to keep informed of current and future legislation.

The morning section of the conference will provide delegates with up to date information on Parts G & L, the Code for Sustainable Homes as well as examining the future direction of travel for building regulations.The afternoon is to be devoted to the delivery of Zero Carbon Homes with the agenda to be set by the new Zero Carbon Hub.

For further details please contact the events team on 020 7960 1646 or events@hbmedia.co.uk

Rosie Hinchliffe

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