HBF Wales Weekly News Summary Friday 20 June 2008

Friday, 20 June 2008Top stories this weekMervyn King's Mansion House speech....read more

Caroline Flint promises further action on housing market.....read moreCarsberg Review of Residential Property published.....read moreQuick LinksWales NewsEconomic NewsGovernment NewsHousing Market NewsIndustry NewsHBF NewsEvent NewsWales NewsNew £25m fund to boost community regeneration

A new fund to boost community regeneration in some of the most deprived areas of Wales, worth at least £25m over the next three years, has been announced by Deputy Minister for Regeneration, Leighton Andrews.

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The Welsh capital could copy London by having a bus lane along a major commuter trunk road.

Traffic Commissioner for Wales Nick Jones said he could use wide-ranging executive powers to force a bus lane on the southbound A470 into Cardiff - the scene of huge congestion during the morning rush-hour.

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Councils throughout Wales have been told to ensure they are ready to benefit from the economic opportunities that will be offered by the multi-billion pound Defence Training Academy at St Athan.

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In his speech to this week's Mansion House Banquet, Governor of the Bank of England, Mervyn King, set out his view that keeping inflation under control was the foundation of future sustained economic growth: He said:

"...surely the lesson of the past fifty years is that, when inflation becomes embedded, the cost of getting it back down again is a prolonged period of sluggish output and high unemployment. Price stability - returning inflation to the target - is a precondition for sustained growth, not an alternative."

On housing he said:

"It is clear that the housing market is being severely affected by the reluctance of the banking system to expand its balance sheet further. Banks are adjusting to the fact that many asset markets are unlikely to re-open in their old form and, as they do so, the supply of mortgage finance is being restricted. Once the adjustment in the financial sector is complete, banks will be able to resume lending. But the era of cheap mortgage finance that underpinned the housing market in 2006 and the first half of 2007 is over and, as a result, it is reasonable to expect the ratio of house prices to incomes to fall back, though with real interest rates still low by the standards of the past fifty years, not to previous averages."

Download the full speech

The minutes of the MPC's meeting on 4 and 5 June have been released. They state that:

"The Committee's central view remained that CPI inflation would peak around the end of the year and then begin to fall back towards the 2% target. But inflation would have some tendency to persist above the target if those making decisions about wages and prices began to expect higher inflation in the future. There was also a risk that, given the likely squeeze on real income growth as a result of the changing relative prices for energy, food and imports, employees could respond by raising wage demands.... [In consequence] the Committee continued to judge that a slowdown in activity, reducing pressure on supply capacity and helping to contain wage growth, would be necessary to ensure inflation returned to the 2% target."

View the full Minutes

The Office for National Statistics' May retail sales figures show that in the three months to May the seasonally adjusted index for the volume of retail sales rose by 1.8% over the previous three months.

The volume of sales in predominantly food stores in the latest three months rose by 0.7% over the previous three months. In predominantly non-food stores sales were up 2.5%. Between April and May the volume of sales rose by 3.5%, reflecting rises in all sectors.

View full figures

Speaking at this week's Chartered Institute of Housing Conference in Harrogate, Housing Minister Caroline Flint recognised current market problems and indicated that she was considering further action, saying:

"And so I am announcing today that I have asked my officials, working with English Partnerships, the Housing Corporation and Sir Bob Kerslake's HCA transition team, to urgently provide me with proposals on where we can do more across our programmes to work with RSLs, housebuilders and others to minimise the problems we currently face and create the right conditions for rapid recovery.

Rest assured, if there are ways that we can use our affordable housing programme or land assets to maintain housing numbers, prepare for a speedy recovery, and support families facing difficulties, we will use them."

Link to full speech

HBF is following up on this announcement with officials.

The Council of Mortgage Lenders published figures showing that gross lending totalled an estimated £25.5bn in May, down 2% from £26.1bn in April but 19% from the £31.5bn high in May 2007. Lending has strongly focused on the remortgage market.

CML director general, Michael Coogan commented:

"The remortgage market remains on track to meet our forecast for growth this year, demonstrating the resilience of the market despite recent bad news. However, by comparison, the next few months will remain very weak for house purchase activity for the funding reasons which are now well rehearsed. We still await first signs of the Bank of England's Special Liquidity Scheme indirectly helping to ease the current logjam."

View full press release

HBOS issued a trading statement on 19 June in which it said:

"The UK housing market remains subdued, with transactions likely to be 45% lower in 2008 than in the previous year.... The decline in house prices is now forecast to be up to 9% in 2008, which will have an adverse impact on secured impairment charges. The overall increase in arrears levels across the book, and in individual segments, is in line with our expectations at the beginning of the year."

View full statement

The National Housing Federation has launched a call to Government to allocate £1bn of the existing Housing Corporation budget to fund a programme for acquiring available private sector homes and land.

In view of the threat the market slowdown poses to affordable housing numbers, the NHF has produced a paper making a number of proposals on how use could be made of Corporation funding to assist RSLs and the wider housing market.

The Times quoted NHF Chief Executive David Orr as saying:

"The £1 billion could be used in [a] more innovative way to buy unsold stock, incomplete developments and land - at varying rates of discount."

Mr Orr also renewed his call for private sector building to be subject to the same timetable for the introduction of higher standards of carbon efficiency as RSLs.

View the NHF proposals

Speaking at the CIH Conference this week, Housing Corporation Chief Executive Steve Douglas set out his views on how the public sector could help ensure the Government's target of 3 million additional homes by 2020 could still be met, including by stepping in when the market could not to acquire and bring forward land.

He concluded by saying:

"The current housing market downturn has proved that the house builder model is driven by rising land and property value. As we can see now, when demand is less than supply, house builders will attempt to offload stock and contract supply, which is perfectly understandable."

"But this doesn't help produce the homes that are still needed. In an upturn the private sector comes into its own, in a downturn relying on the private sector alone is not enough. It is at times like this that the public sector must develop new approaches. If it does not, it will fail those who still need an affordable home to rent or buy."

"Now is the time for us in the public sector, local authorities and central government to take a leadership role. Between us we have a significant amount of developable land and resources; housing associations and developers have considerable development expertise. Even in a declining market, housing associations retain significant assets. We must tap these skills and resources creatively and collaboratively. Only with true partnerships and new approaches will we succeed."

Sir Bryan Carsberg's Review of Residential Property - undertaken for RICS, the National Association of Estate Agents and the Association of Residential Letting Agents - was published this week.

Sir Bryan concludes the current transaction process is unsatisfactory and highlights three key issues that he considers should be the foundations for reform:

Recommendation 18 of the report concerns the sale of new homes. Sir Bryan recognises "that several of the problems I have identified as needing to be dealt with in a regulatory regime for selling agents would not apply to a direct sale by a developer or builder." He recommends, however, that:

"Except in relation to specific building contracts between a builder and a first owner, I recommend that developers and builders selling property directly to the public should be subject to a similar regulatory scheme [to ensure the better provision of information to buyers] to that applying to estate agents, tailored to the specific characteristics of the transactions concerned."

Sir Bryan's full report

In press statements, RICS and the NAEA both supported the thrust of the Carsberg Review's findings.

For RICS, Gillian Charlesworth said:

"Sir Bryan's review highlights a number of key areas where the current approach is clearly failing."

"The processes for regulation and redress do not go far enough to protect the consumer and we agree that participation in regulatory and redress schemes needs to be both consistent and universal."

"They should include all estate agents, letting agents, managing agents and landlords."

"The RICS remains committed to building a coalition that can deliver property policy reform."

NAEA Chief Executive Peter Bolton King commented:

"One or two bad apples can still affect the whole barrel and therefore Sir Bryan's recommendation that all agents practicing in the UK should be registered by an official body and regulated by an independent standards board is one we wholeheartedly endorse. The NAEA and RICS are already working closely together to set up an independent standards board but it still remains voluntary for estate agents to be part of a regulatory body. The many recommendations put forward in Sir Bryan's review on how to legislate the property industry as a more cohesive entity are a great starting point on what will no doubt be a lengthy consultation period on how best to look at reforming this area."

In his reaction to the Carsberg Review, Conservative Shadow Housing Minister Grant Shapps commented:

"Labour has let down everyone on the property ladder in Britain today but we intend to do everything possible to help hard pressed home owners by scrapping HIPs, axing stamp duty for first time buyers and doing away with density targets which has meant that too many flats have been built at the expense of family homes."

HBF Director of External Affairs John Slaughter took part in a debate about the issues facing the housing market in Jeff Randall's weekly business news programme on Sky News on Monday.

See the interview with John Slaughter

HBF has submitted its response to the Government consultation entitled "Prosperous Places: Taking forward the Review of Sub National Economic Development and Regeneration". The consultation proposes giving responsibility for regional strategies, including regional planning powers, to the Regional Development Agencies (RDAs), in effect, abolishing the existing regional assemblies.

While HBF has supported the need for a single, integrated, regional strategy we remain sceptical as to whether a strategy process led by the RDA would be inclusive and achieve the necessary buy in from both public and private sector stakeholders.

View HBF's response

Marriott Grosvenor Square - 5 December 2008

The Home Building Industry Ball, will be held this year at the luxurious Marriot Grosvenor Square hotel in Mayfair, situated in the heart of central London. The evening will commence with a champagne drinks reception at 7.30pm. This will be followed by a delicious a la carte three course meal and live entertainment in the grand surroundings of the Westminster ballroom. Guests then take to the floor to dance the night away to the sounds of a live band.

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

Tuesday 15 July, Thinktank, Birmingham

The Government is seeking a major step change in water efficiency in new homes.

This seminar will examine the proposals enshrined in the amended Building Regulations Part G now subject to consultation, as well as the water aspects of the Code for Sustainable Homes and ways of securing maximum points to achieve higher Code levels.

Available to book on line at http://www.hbmedia.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

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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