HBF Wales Weekly News Summary Friday 20 March 2009

20 March, 2009

Friday, 20th March 2009

Top stories this week

Shapps tells HBF policy conference “you will be welcomed with open arms”...read more

Beckett meets first HomeBuy Direct customers.....read more

FSA publishes “The Turner Review”: a wide-ranging review of global banking regulation.....read more

Rightmove house price index.....read more

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Events Wales news

Right to Buy Sales, October to December 2008

Statistics on the number of right to buy sales of local authority dwellings completed in Wales include data for the quarter October to December 2008. The latest release updates the statistics previously released on 17 December 2008. Key points from the latest release are:

Claims:

During the October to December quarter 2008 there were 112 RTB claims;

RTB claims decreased by 67 from the July to September 2008 figure of 179 and decreased by 238 from the same quarter the previous year;

There were a total of 2,277 RTB claims during 2007-08 which was 2,745 (55%) less than during 2006-07.

Completed sales:

There were 32 completed RTB sales during the October to December quarter 2008. This was 11 less than the previous quarter and 165 less than the same quarter the previous year;

Overall there were 819 completed RTB sales during 2007-08, which was 429 (34%) less than during 2006-07;

On average only around 57% of claims ever reach the completed sales stage.

Carwyn Jones sets out credentials to lead Wales

The favourite to succeed Rhodri Morgan as First Minister set out his credentials to lead the country in a major speech this week.

Carwyn Jones, currently Counsel General and Leader of the House in the Assembly Government, said that the Labour Party must base its appeal on “the politics of social justice and sustainability”.

Speaking in Aberystwyth, he warned that Welsh Labour in Government faces tough decisions, and will require collective leadership to see the party through, calling for “politics that delivers dynamic action with a cool head”.

WAG - Weathering the Storm

Experts in funding, skills training, tendering and innovation will be offering free advice to Welsh businesses at a new series of seminars designed to help them get through the recession and emerge in stronger and more competitive shape.

The 'Weathering the Storm' series is organised by the Welsh Assembly Government but will bring together private as well as public sector organisations to present a truly comprehensive package of business support services - taking in both UK-wide schemes as well as measures available only in Wales.

The series will kick off in Llandudno on 30th March - and sessions will also take place in Aberystwyth, Newtown, Swansea and Cardiff.

Each of the five events will include a question and answer session, workshops on specific subjects - and a knowledge fair, where a whole range of organisations will exhibit their support to business services

The objective of the series is to make sure that businesses in every part of Wales get the maximum possible support during the recession and are able to emerge from it in a healthy position.

£17m of European funding given to flood and coastal defences in Wales

£17m of European funding has been given to flood and coastal defence projects across Wales, Environment Minister Jane Davidson announced this week.

The 12 schemes are the first in Wales to be given funding from £30m of European convergence support made available in December. It will be invested in measures to protect homes and businesses. Ms Davidson said:

“There is a realisation that our communities are at growing risk from flooding and coastal erosion due to the impact of climate change. This is a reality we are going to have to come to terms with. We have to alleviate its effect on our communities and prepare in the best way we can. No one can stop flooding, but we can prepare.

“The funding for these works will help protect vulnerable areas in the best way possible. They will make a significant difference to the lives of local people who know only too well the effects of flooding.”

HBF news

Shapps tells HBF Policy Conference “you will be welcomed with open arms”

Shadow Housing Minister Grant Shapps took the opportunity presented by this week’s highly successful HBF Policy Conference to outline the Conservatives’ plans for delivering new homes if they are elected to form the next government.

Shapps explained to more than 130 delegates at Tuesday’s conference in London that the Conservatives would offer financial incentives to local communities to garner support for major new development. Shapps said the vision was to:

“Imagine a world where you are invited in to develop – asked in with open arms because they want to see development in your area.”

Homes and Communities Agency Chief Executive Sir Bob Kerslake also addressed the audience, outlining plans to help turn around the housing market - including plans to be a catalyst to invigorate investment in the private rented sector.

In a packed day, delegates also heard from John Callcutt, Chairman of the Callcutt Review, David Pretty speaking about the Killian Pretty Review, Neil Jefferson of the Zero Carbon Hub, Richard Donnell of Hometrack and Christopher Hill of RBS Corporate. The day was chaired by HBF Executive Chairman Stewart Baseley who also introduced HBF Director of Economics John Stewart and Director of Planning Andrew Whitaker.

Michael Coogan, Director General of the Council for Mortgage Lenders, delivered a candid speech on the lending market, revealing that net lending in 2009 is likely to be negative £25bn – that is to say, more money will be repaid then lent out this year.

Click here to read more and view the presentations given on the day

Beckett meets first HomeBuy Direct customers

Housing Minister Margaret Beckett this week visited a Barratt homes site in Cheltenham to meet one of the first people to benefit from the HomeBuy Direct scheme.

Over £400m of Government money has been allocated for HomeBuy Direct, 79% of which has gone to HBF members. HBF initially proposed the scheme to Government and then worked with the HCA to develop it to be workable for both the industry and customers.

HBF press release with HCA following Beckett’s visit

HBF also issued its own release jointly with the HCA welcoming HomeBuy Direct as a huge boost to the construction industry at the current time and a means of helping to protect both jobs and industry capacity, vital for future housing provision.

Welcoming progress on HomeBuy Direct at the HBF’s Policy Conference (17th March) Sir Bob Kerslake, Chief Executive of the HCA, said:

“We are extremely pleased with the response and progress on HomeBuy Direct which is very encouraging for both buyers and the house building industry. This has been an excellent example of partnership working, with the HBF playing a key role in developing the product. It is also really good news that another major lender, Barclays, has this week confirmed its support of the scheme through its Woolwich mortgage arm.”

Stewart Baseley, HBF Executive Chairman added:

“Today’s news is fantastic for home buyers and the industry. HomeBuy Direct will help thousands of potential home owners realise their ambition of home ownership whilst maintaining housing output and so protecting industry capacity – so vital if we are to provide the houses we know this country desperately needs for the future. HBF will continue to work with the industry and the HCA to find other ways of countering the strangling impact of the lack of mortgage availability.”

Economic news

FSA publishes “The Turner Review”: a wide-ranging review of global banking regulation

The Financial Services Authority (FSA) has published the Turner Review of global banking regulation. Lord Turner, Chairman of the FSA, was asked by the Chancellor of the Exchequer to review the events that led to the financial crisis and to recommend reforms.

The Review identifies three underlying causes of the crisis – macro-economic imbalances, financial innovation of little social value and important deficiencies in key bank capital and liquidity regulations. These were underpinned by an exaggerated faith in rational and self-correcting markets.

It stresses the importance of regulation and supervision being based on a system-wide "macro-prudential" approach rather than focussing solely on specific firms. It recommends:

Fundamental changes to bank capital and liquidity regulations and to bank published accounts;

More and higher quality bank capital, with several times as much capital required to support risky trading activity;

Counter-cyclical capital buffers, building up in good economic times so that they can be drawn on in downturns, and reflected in published account estimates of future potential losses;

A central role for much tighter regulation of liquidity;

Regulation of "shadow banking" activities on the basis of economic substance not legal form: increased reporting requirements for unregulated financial institutions such as hedge funds, and regulator powers to extend capital regulation;

Regulation of Credit Rating Agencies to limit conflicts of interest and inappropriate application of rating techniques;

National and international action to ensure that remuneration policies are designed to discourage excessive risk-taking;

Major changes in the FSA’s supervisory approach, building on the existing Supervisory Enhancement Programme (SEP), with a focus on business strategies and system wide risks, rather than internal processes and structures; and

Major reforms in the regulation of the European banking market, combining a new European regulatory authority and increased national powers to constrain risky cross-border activity.

The Review also raises a number of wider issues and “open questions”. For the housing market an important issue to be considered is whether there should in future be any form of product regulation for mortgages – for example, on permitted loan to value ratios. The Review recognises there are arguments for and against product regulation, including whether any such regulation should itself be “counter-cyclical” in nature. The FSA is carrying out a further review of mortgages which will report later in the year and we will represent industry views to this.

HBF: "Mortgage regulation won't solve housing market boom cycles”

Against the background of comment on the possibility of mortgage product regulation, HBF issued the following statement in advance of the Turner Review announcement that was carried by the BBC and in the national media.

HBF warned that regulation of the mortgage market was not a solution to the threat of future house price inflation, the root causes of which lie elsewhere, and indeed could itself exacerbate the problem.

“And whilst no one is advocating a return to the irresponsible lending levels of yesteryear, imposing prescriptive inflexible constraints on lenders that take no account of personal circumstances or risk cannot be used as a tool control the inflationary consequences of restrictions on land supply - the major risk to future housing supply and thus prices.

Speaking at HBF's Policy Conference, Executive Chairman Stewart Baseley said:

“If the FSA and Government go down the route of mortgage control to try to head off future asset bubbles they are likely to entrench and worsen future housing under-supply that is rooted in the constraint of land supply. House price booms are caused by an imbalance between supply and demand and the long term solution to escalating prices is to ensure there are enough homes to meet demand - not to impose regulation that takes no account of personal circumstance or risk that could discriminate against people perfectly able to realise their ambitions of home ownership. We are cleaning the car window when the petrol tank has a hole in it.”

CML response to Turner report

In its response, the CML said:

“The Council of Mortgage Lenders believes that Lord Turner's report provides a helpful assessment of the regulatory environment as it stands and as it is expected to change. The CML looks forward to working with the FSA as it develops its proposals further. Michael Coogan, CML Director General, commented:

"We welcome the opportunity to explore the pros and cons of limitations on products in a rational way. And we agree that this needs to be done alongside an assessment of alternative ways of regulating to achieve the same risk-mitigating objectives.

"We see the FSA's September paper on the future of mortgage regulation as a real opportunity to help shape a future regulatory landscape that will serve both lenders and consumers better. We look forward to working constructively and collaboratively with the industry and the FSA towards this objective.”

CML: February gross lending

Gross mortgage lending declined to an estimated £9.9bn in February, down 15% from £11.7bn in January and 60% from February 2008, according to new data from the Council of Mortgage Lenders. This is the lowest monthly lending figure since February 2001.

February is typically the weakest month for mortgage completions. And although this is a larger decline than the 3-4% usually experienced between January and February, it is in-line with the CML’s forecast of £145bn gross mortgage lending in 2009.

Michael Coogan, CML Director General, said:

"Retail savings are now the predominant source of funding for mortgages. But banks and building societies have seen savings ebb away to National Savings and Investments, which has a negative impact on their ability to lend.

"This is yet another example of fractured policy. There are now fewer active lenders in the market, but the government wants them to lend more. At the same time, the government's own savings institution is sucking away the funds that would enable them to do so. Until funding improves, the capacity of lenders to lend will remain constrained."

FSA statistics on mortgage lending: March 2009

Since the beginning of 2007, some 300 regulated mortgage lenders and administrators have been required to submit a Mortgage Lending & Administration Return (MLAR) each quarter to the Financial Services Authority (FSA), providing data on their mortgage lending activities. The FSA published the first set of statistics based on these data in August 2008. The latest, fourth edition covers the period from 2007 Q3 to the end of 2008 Q4.

Key results from the publication include:

The total value of outstanding loans was £1,200bn, an increase of only 3.5% compared to a year earlier. But quarterly growth continued to slow, with a Q4 increase of just 0.25%;

New lending peaked in Q3 2007 at £102bn before declining to £45bn in Q4, leaving gross lending 26% lower in the quarter, and 48% lower than a year earlier;

The value of new loans for house purchase fell by 25% in Q4 to £17bn, to show a decline of 63% on a year earlier;

As a proportion of new lending, loans for house purchase were unchanged at 38% in Q4, while re-mortgages were 1% lower at 54%;

Proportions of new lending done at an LTV of more than 90% continued to fall. From a peak of 15% of new lending in early 2007, this fell to 10% in early 2008, and to just 6% in Q4. The use of combinations of high LTVs and high income multiples has also declined: from 9% of new lending for most of 2007, to 7% in Q1 and Q2, and to just under 4% in Q4;

Numbers of new possessions have grown significantly since Q3 2007, but the number of new possessions in Q4 at 13,028 is actually 436 fewer than the 13,464 recorded for Q3. New possessions in Q4 were nonetheless 60% higher than a year earlier;

For 2008 as a whole, numbers of new possessions reached 46,750 which is an increase of 68% on the 27,900 recorded for 2007.

Bank of England: Minutes of the MPC

The Bank of England this week published the minutes of the Monetary Policy Committee meeting of 4th and 5th March at which it was decided to reduce the Bank Rate to 0.5% and to finance £75bn of asset purchases. The minutes state that:

“The Committee agreed that further monetary easing was required to meet the inflation target, and first discussed whether there should be any additional cuts in Bank Rate. Some arguments were identified for making no further rate reductions. Although the current extremely low level of Bank Rate was providing a substantial stimulus to the economy, the transmission of any further rate cuts through to activity and inflation was likely to be significantly impaired. In particular, the Committee remained concerned that a further reduction could have some adverse impacts on the economy, given its effects on the profits that banks and building societies were able to make through the spread between their deposit and lending rates.

“However, there were also arguments in favour of making a further reduction in Bank Rate. First, a cut in interest rates would still have some effects in boosting nominal spending and inflation, for example through the usual exchange rate and asset price channels. Second, a lower level of Bank Rate should increase the effectiveness of the further measures which were likely to be needed to ease the stance of monetary policy....Third, concerns about the impact of a low Bank Rate on lending capacity were best met by policy initiatives to stabilise the financial system.”

With regards to the allocation of £75bn of asset purchases, the minutes state that:

“The Committee agreed that such [asset] purchases were necessary in order to increase nominal spending growth to a rate consistent with meeting the inflation target in the medium term.”

Download a copy of the minutes

Housing market news

NHMB: 88% still believe in home-ownership but frustration soars as confidence Is knocked

The New Homes Marketing Board issued a press release this week which stated that:

The vast majority of Britons still want to invest in homes of their own despite the worsening economic situation, according to a new YouGov survey commissioned for the New Homes Marketing Board (NHMB).

While the shortage of mortgage funding and the loss of confidence in the housing market are causing serious frustrations, the public’s belief in home-ownership is barely dented, with 88% of respondents stating that they regard it as a sensible investment in their future.

A virtually identical survey carried out for the NHMB nine months ago – before the worst of the banking crisis and global credit crunch - produced a figure only marginally higher, at 90%.

David Pretty CBE, Chariman of the NHMB commented:

“Even though the economic situation has changed radically in the past nine months and we are now in a full-blown recession, our new survey shows that underlying demand for home ownership remains very strong.

“We said after last year’s survey that too many people were prevented from buying by the shortage of mortgages, which couldn’t even satisfy the demand that existed then, as well as by punitive rates of interest and the need for much larger deposits. Since then, the economic climate has deteriorated to a much more gloomy and uncertain outlook.

“We also warned that the problems now facing the property market could drive pent-up demand to dangerously high levels. That is coming true, as we warned again last month. So many people are having to put their plans on hold that the housing backlog across the country, which has been substantial for some years, could soon be approaching 1 million.

“Bad as the current economic downturn is at the moment, sooner or later it will ease - and when it does, this unsatisfied demand will be released into a market which will not be able to satisfy it. This will put strong upward pressure on house prices once again, and that certainly won’t benefit house buyers.”

Rightmove house price index

Rightmove’s house price index, published this week, reported that:

The average asking price for a property rose by £1,918 from £216,163 in February to £218,081;

Agents reported renewed buyer interest and a price floor at circa 25% below peak prices;

There was a 57% fall in new listings – 79,000 in March 2009 compared to 182,000 March 2008;

Enquiries were 120% up on last year and the average time on the market fell from 91 to 82 days;

Investor interest picked up as yields on property rental look more attractive compared to record low interest rates.

Miles Shipside, Commercial Director at Rightmove, commented:

“Some sellers are still pricing wishfully high, though it is encouraging that elements of the market have adapted relatively quickly to find a new price floor at a discount of around 25% from peak. We are seeing a big jump in enquiries, looking for those best buys. However, it is disappointingly predictable that the banking sector is still in the early stages of coming clean about its levels of toxic debt, limiting funding for one of the few bright spots of consumer demands in the economy.”

CLG house price index - January 2009

The latest UK house price index statistics produced by Communities and Local Government were released this week and include data based on mortgage completions during the month of January 2009. The key points from the release are:

UK house prices were 11.5% lower than in January 2008;

The mix-adjusted average house price in the UK stood at £195,724 in January 2009 (not seasonally adjusted);

UK house prices fell by 3.9% in the quarter ending January 2009. This compares with a fall of 5.2% for the quarter ending October 2008;

Annual average house prices fell in England (-11.8%), Wales (-10.4%), Scotland (-6.3%) and Northern Ireland (-14.3%);

Annual average house prices paid by first-time buyers in January 2009 were 15.4% lower than a year ago. By comparison average house prices paid by former owner occupiers were 10.0% lower.

Industry news

CLG: Industry briefing note on HIPs

Communities and Local Government (CLG) have released a briefing note this week stating that:

“From 6th April 2009, if you are involved in buying or selling homes in England or Wales, there are three key changes to Home Information Packs (HIPs) you need to know about:

The temporary first day marketing exemption will be removed, which means that a HIP must be available on the first day a property is marketed;

A Property Information Questionnaire (PIQ), completed by the seller, must be included in the HIP;

The end of the use of insurance to cover missing data in personal searches.

These changes have important implications for industry practice in the marketing of residential properties for sale and the advice given to clients.”

European Commission adopts two regulations to progressively remove from the market non-efficient light bulbs

The European Commission has adopted two ecodesign regulations to improve the energy efficiency of household lamps and of office, street and industrial lighting products. The two regulations lay down energy efficiency requirements which will save close to 80 TWh by 2020 (roughly the electricity consumption of Belgium, or of 23 million European households, or the equivalent of the yearly output of 20 power stations of 500 megawatts) and will lead to a reduction of about 32 million tons of CO2 emission per year. Inefficient incandescent light bulbs will be progressively replaced by improved alternatives starting in 2009 and finishing at the end of 2012.

The two regulations set energy efficiency, functionality and product information requirements for households lamps (in particular incandescent bulbs, halogen lamps and compact fluorescent lamps), as well as for lighting products typically used in office, street and industrial lighting (fluorescent lamps, high-intensity discharge lamps and related ballasts and luminaires).

Households will still have the choice between long-life compact fluorescent lamps that currently yield the highest energy savings (up to 75% less energy than incandescent lamps), or efficient incandescent lamps (of the halogen type) fully equivalent to conventional bulbs in terms of light quality, providing between 25% and 50% energy savings.

These regulations are only two of the Ecodesign measures that will be adopted by the Commission over the coming months, targeting many more products such as consumer electronics, white goods or heating appliances.

HBF Briefing: East Midlands RSS: Secretary of State’s changes and adoption of the regional plan

The East Midlands Regional Plan (the Regional Spatial Strategy) was adopted by the Secretary of State on 12th March 2009. The HBF has produced a member briefing which summarises the essential elements.

Click here to view the HBF briefing.

Government and political news

Local Government Association bans 200 words

Council leaders have published a list of 200 words that public bodies should not use if they want to communicate effectively with local people.

The Local Government Association list, which has been sent to councils across the country, sets out 200 words and phrases that all public sector bodies should avoid when talking to people about the work they do and the services they provide. The list of banned words and their suggested alternatives include:

Area based: in an area

Community engagement: getting people involved

Framework: guide

Localities: places/town/city/village

Strategic: planned

Sub-regional: work between councils

Sustainable communities: environmentally friendly

Toolkit: guidance

Stakeholder: other organisations

EventsZero Carbon, Part F and Part L - The cost and impact on housebuilders

Wednesday 20th May 2009 - Think Tank, Birmingham

With the consultations for Building Regulations Parts F & L and the zero carbon definition taking place this year, this conference will help housebuilders understand the impending changes and their cost and impact on the industry. It will also provide delegates with valuable and practical insight into the future of Building Regulations.

This full day event will specifically examine zero carbon, Part F and Part L over three morning sessions. The afternoon session will concentrate on the introduction of the new SAP methodology later this year with real life examples and a software demo. The conference will also analyse the real cost of sustainable housebuilding, looking at delivering to code level 3 and 4 and higher level schemes

To book online please click here or for further information please contact the events team on 020 7960 1646 or events@hbmedia.co.uk

to topHope Challenge: 12 - 14th June 2009, Peak District

HBF's nominated charity, Habitat for Humanity, which builds safe, decent homes for families living in poverty, is organising a fundraising event to take place in the summer. Taylor Wimpey, Bovis and HBF are amongst the teams already registered for the Hope Challenge 2009, and they are looking for more house builders to enter an event that was born out of industry activity. It is a challenge event for teams of 3-6 people that will test your initiative, your teamwork and your fitness. And by sleeping in your very own shelter you will experience some of the challenges faced by those who live in poverty housing. The event involves:

2 days and 2 nights in the great outdoorsMental and physical team challengesThe Shelter Build challenge - sponsored by NHBC1000m of hill ascent and 20 miles of trekkingA balance of fitness, strategy and team work

HFH is looking for teams of people who want to rise to the challenge of raising funds in support of the 2 billion people living in poverty housing around the world.

Click here for more information and entry requirements

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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