HBF Wales Weekly News Summary Friday 6 February 2009

Friday, 6 February 2008Top stories this weekBank of England reduces Bank Rate by 0.5 percentage points to 1.0%.....read more Bank of England: Lending to individuals December 2008.....read more

Professor Michael Parkinson's report on the credit crunch and regeneration.....read moreHalifax house price index.....read moreNationwide: Consumer confidence index.....read moreQuick LinksWales news Economic news Government and political news Housing market news Industry news Events Wales news£15m cash boost to deliver up to 300 new affordable homes

The Welsh Assembly Government has agreed a £15m deal with housing associations in local authority areas throughout Wales to deliver up to 300 new affordable homes, the Deputy Minister for Housing, Jocelyn Davies AM announced.

The £15m is the first instalment of the £42m extra funding that Ms Davies made available in December as part of the Assembly Government's response to the downturn in the housing market. The money will be used to buy unsold homes and plots from private contractors.

The extra money will go to registered social landlords, including housing associations, in the 22 local authority areas across Wales and allow local authorities and housing associations working in partnership to respond to the current economic situation.

Ms Davies said:

"I am pleased to reveal that housing associations will this year get an extra £15m to boost the creation of affordable housing in Wales. Our aim was to give a vital stimulus to the construction industry, while also helping the most vulnerable families in Wales."

Private sector could fund Severn tidal power scheme

Some of the shortlisted plans for a tidal power project in the Severn Estuary could be entirely funded by the private sector, the Government has suggested.

Climate Change Minister Joan Ruddock said it was "not our assessment" that the taxpayer would necessarily have to meet the cost.

to top Economic newsBank of England reduces Bank Rate by 0.5 percentage points to 1.0%

The Bank of England's Monetary Policy Committee voted to reduce the official Bank Rate paid on commercial bank reserves by 0.5 percentage points to 1.0%.

At its February meeting, the Committee noted that, although the transmission mechanism of monetary policy was impaired, the past cuts in Bank Rate would in due course nevertheless have a significant impact. Together with the recent easing in fiscal policy, the substantial fall in sterling and past falls in commodity prices, that would provide a considerable stimulus to activity as the year progressed. Nevertheless, the Committee judged that there remained a substantial risk of undershooting the 2% CPI inflation target in the medium term at the existing level of Bank Rate. Accordingly, the Committee concluded that a further reduction in Bank Rate of 0.5 percentage points to 1.0% was warranted this month.

The Committee's latest inflation and output projections will appear in the Inflation Report to be published on Wednesday 11 February.

The minutes of the meeting will be published at 9.30am on Wednesday 18 February.

to topCML reaction to Bank Rate decision

The Council of Mortgage Lenders said that the latest rate cut was unlikely to have a material effect on the overall state of the mortgage market.

CML Director General Michael Coogan commented:

"While borrowers on tracker rates will welcome the rate cut, it is doubtful whether it will create the conditions to achieve significantly more new lending. It will not be a surprise if banks and building societies try to prioritise savers in this very low interest rate environment. For borrowers who remain in employment, affordability is unlikely to be an issue at the moment.

"But, if the rate cut helps businesses, and therefore helps to keep people employed, this will at least help to cushion the impact of the recession on the housing and mortgage markets. In practice, rate cuts alone will not achieve this objective as they have become a more blunt instrument - they are only one of the tools being used to try to help the UK weather the recession."

Bank of England: Lending to individuals December 2008

The Bank of England reported that:

The increase in total net lending to individuals in December (£2.2bn) was higher than the November increase, but below the previous six-month average. The twelve-month growth rate slowed further, to 3.6%, and the three-month annualised growth rate ticked up by 0.2 percentage points to 1.5%;

Within the total, the increase in net lending secured on dwellings (£1.9 bn) was higher than the November increase and the previous six-month average. The twelve-month growth rate slowed further, to 3.4%. The three-month annualised growth rate ticked up by 0.2 percentage points to 1.2%;

The number of loans approved for house purchase (31,000) was higher than in November, that for remortgaging (36,000) was lower than in November and that for other purposes (32,000) was the same as in November. Approvals for each purpose were lower than their previous six-month average;

The increase in net consumer credit in December (£0.3bn) was below the increase in November and the previous six month average. Net credit card lending decreased by £0.1bn (a net repayment) and net other loans and advances rose by £0.4bn;

The annual growth rate of consumer credit continued to slow, to 5.0%; the three-month annualised growth rate ticked up by 0.1 percentage points, to 2.9%.

to topBank of England: Special Liquidity Scheme

The Bank of England published information about the use of its Special Liquidity Scheme (SLS) this week.

The SLS was introduced in April 2008 to improve the liquidity position of the banking system by allowing banks to swap their high quality mortgage-backed and other securities for UK Treasury Bills for up to three years. The Scheme was designed to finance part of the overhang of illiquid assets on banks' balance sheets by exchanging them temporarily for more easily tradable assets. Securities formed from loans existing before 31 December 2007 have been eligible for use in the SLS.

As previously announced, the drawdown period for the SLS closed on 30 January. Use of the Scheme has been considerable, totalling £185bn of Treasury Bills.

Although the drawdown window to access the SLS has closed, the Scheme will remain in place for three years, thereby providing participating institutions with continuing liquidity support and certainty.

to top Government and political newsProfessor Michael Parkinson's report on the credit crunch and regeneration

Professor Michael Parkinson, from the European Institute for Urban Affairs at Liverpool John Moores University, was asked by Local Government Minister John Healey to assess the impact of the credit crunch on the commercial property sector, the housing market and the regeneration sector.

His independent report "The Credit Crunch and Regeneration: Impact and Implications" found that the financial crisis is impacting on a financial model that has underpinned regeneration in recent years and pressure on the sector is likely to get more intense.

It concludes that the impact is mixed. Many projects already underway are continuing especially where the public sector is involved. Projects yet to begin were at risk. Economically marginal projects are increasingly less attractive and the north and midlands have been affected more than the south east.

Professor Parkinson is clear the system will not recover quickly and everyone - from the private sector, councils, regional agencies to central Government - has a part to play in getting through the downturn and preparing for the upturn.

Michael Parkinson has made the following overall assessment:

The financial crisis is severe and not over yet. The pressures will get more intense;Long term regeneration activity is continuing and must be sustained. Need to retain capacity to keep skills in sector;Regeneration has moved and will continue to move from risky to quality investments. Deprived areas will need most support;Real long-term leadership and commitment is needed to keep the wheels moving and prepare for upturn;The sector needs more financial innovation, more genuine partnerships and more quality schemes;Public resources and programmes are keeping regeneration going as much as the private sector. This contribution will be even more crucial in the coming months.

to topCentre for Cities: Response to Professor Michael Parkinson's report

Responding to the publication of Professor Parkinson's report on the credit crunch and regeneration, Dermot Finch, Director of the Centre for Cities said:

"This review makes grim reading. Privately-financed regeneration has undergone a major slowdown. The freeze on new development is now hitting cities hard - particularly those in the North, with thousands of job losses nationwide in commercial and residential construction.

"There are still viable regeneration projects out there. The new Homes & Communities Agency, along with local councils, need to identify and kick-start the best development projects, with an urgent injection of public sector cash. This will help to get the regeneration market going, until the banks start lending again."

Healey: Parkinson right that regeneration can come through downturn

The Government's reaction was that the Parkinson report rightly recognises the credit crunch's impact on regeneration, but also says that with the right long term vision and support, like its action to bring forward funding, it can come through the downturn. Local Government Minister John Healey said.

"I want to thank Michael for his work and report. He is rightly concerned about the credit crunch's impact on regeneration and jobs but he is clear many schemes are continuing, especially those that are financially sound or have public backing.

"Over the last ten years many areas have been turned around because of the record regeneration investment we put in.

"In the pre-budget report we brought forward a further £775m to support construction and regeneration, introduced a temporary exemption for 70 per cent of empty properties to help small businesses and in September committed £400m for 5,500 new social homes.

"If everybody stays committed and focused on the longer term prize, the sector can get through the downturn for the good of deprived neighbourhoods, regeneration jobs and regional economies."

George Osborne calls for a new settlement between the banks and society

Addressing the think tank Reform's conference at the London Stock Exchange this week, Shadow Chancellor George Osborne called for a new settlement between banks and society.

The Shadow Chancellor stressed the settlement must allow "a profitable and successful financial" services sector in the UK, but must also provide protection for taxpayers and the broader economy.

He attacked the Government for allowing banks to become over-extended and for ignoring the risks of the "asset bubble" - including in house prices:

"We believe government should take a view on asset prices and seek to manage the overall level of debt in an economy. Our proposal is to put the Bank of England in charge of that task."

He explained the Conservatives' proposal that, through a Debt Responsibility Mechanism, the Bank of England would monitor the levels of leverage in the system and call time on excessive debt. He also said:

"We would require banks across the world to set aside more money in the good years to provide them with a greater buffer for the bad years. I am delighted that this now appears to be on the agenda for the G20."

to top Housing market newsHalifax house price index

The Halifax house price index reported this week that:

House prices increased by 1.9% in January. This rise reverses December's 1.6% fall. Prices in the three months to January compared to the previous three months - a better indicator of the underlying trend - were 5.1% lower;

House prices in January were 17.2% lower on an annual basis. Despite the monthly gain, the annual rate of change (measured by the average for the latest three months against the same period a year earlier) fell from -16.2% in December to -17.2%;

There were signs of an increase in activity, albeit at quite a low level. Bank of England industry-wide figures showed that the number of mortgages approved to finance house purchase increased by 15% in December. Nonetheless, approvals were still at quite a low level; 58% lower than in December 2007;

Lower interest rates were improving affordability. Mortgage payments have fallen from 31% of gross earnings for the average new borrower in the first half of 2008 to an estimated 21% in January. Housing affordability has also improved according to the house price to average earnings ratio, which decreased to an estimated 4.48 in December 2008 from a peak of 5.84 in July 2007; a fall of 23%. The long-term average is 4.0.

Commenting, Martin Ellis, Housing Economist, said:

"It is always important not to place too much weight on any one month's figures. Historically, house prices have not moved in the same direction month after month even during a pronounced downturn. For example, prices fell for seven successive months in 1989 but subsequently increased in three of the first ten months in 1990 even though the overall trend in prices was downwards.

"There are some very early signs that market activity may be stabilising, albeit at quite a low level. Nonetheless, continuing pressures on incomes, rising unemployment and the negative impact of the dislocation of the financial markets on the availability of mortgage finance are expected to mean that 2009 will be a difficult year for the housing market."

to top Nationwide: Consumer confidence index

Nationwide's consumer confidence index reported this week that:

The consumer confidence index fell to 40 in January, down from 48 in December;The present situation and expectations indices also fell to 23 and 51 respectively in January;The spending index has tracked upwards for the last six months to 83 this month, compared to 57 during January 2008;A third of people questioned in January 2009 believed that now is a good time to make a major purchase, such as a house or car, compared to 13% in the same month last year.

Nationwide's Chief Economist, Fionnuala Earley, commented:

"It is no surprise that consumer confidence weakened again in January given official figures now show the UK fell into recession at the end of 2008. Growing concerns about the economy have been added to by further reports of job losses and this is clearly affecting consumers' views of the present and future economic and employment situation. Over the coming months we expect consumers to remain cautious as they take stock of how these economic conditions will impact on them and we would not expect to see a significant improvement in confidence until there is greater certainty about economic recovery."

to topNAEA: First-time buyers finally find hope in the housing market

The proportion of those looking to buy who are first time buyers (FTBs) more than doubled in the first two weeks of 2009, according to the National Association of Estate Agents (NAEA). 22.5% of registered buyers were FTBs, up from 10% in December and 14.5% in January 2008. Peter Bolton-King, CEO of the NAEA, said:

"This figure is highly significant in terms of demonstrating an increase in consumer confidence. The NAEA views FTBs as the bedrock of a healthy housing market.

"During the boom years we saw the number of FTBs as a proportion of buyers rise as high as 37%, and I believe that an average of 25% is indicative of a healthy and confident market.

"While the figure of 22.5% is definitely not a sign that the housing sector is out of the woods yet, it does suggest that those infamous green shoots of recovery may not be as far off as first thought."

Figures from a national survey of the NAEA's 14,000 members also demonstrate that second time buyers are determined to try to bag a bargain. Agents reported a flurry of activity in the first two weeks in January, with an average of ten new sellers per agent. Agents made an average of four sales in the first two weeks of January - compared to a monthly average of six in November and December 2008. 55% of those looking to buy in the first two weeks of January came from this market segment. Buy to let investors made up 22% of the market - indicating bricks and mortar remains a sound investment, particularly with interest rates falling. Peter Bolton-King said:

"These statistics are evidence that consumer confidence is slowly being restored but I must counter this by saying that unless lenders respond to consumer demand, then any green shoots will wither and die on the branch."

to top Industry newsThe potential for renewable gas in the UK

As part of its wider efforts to understand and facilitate the development of the UK's future energy portfolio, the National Grid has carried out some analysis to evaluate the potential for renewable gas to contribute to that mix.

The paper by the National Grid states that renewable gas has the potential to make a significant contribution to the UK's renewable energy and carbon reduction targets for 2020. And in the longer term, with the right Government policies in place, renewable gas could meet up to 50% of UK residential gas demand. Produced mainly via a process of anaerobic digestion (AD) or thermal gasification of the UK's biodegradeable waste, renewable gas represents a readily implementable solution for delivering renewable heat to homes in the UK. Renewable gas can also deliver greater security of energy supply for the country as well as a solution for waste management as UK land fill capacity declines.

Click here to download a copy of the paper by the National Grid

Defining zero carbon homes consultation events

On 17 December 2008, Communities and Local Government (CLG) launched its consultation on the definition of a zero carbon home. This consultation is in response to uncertainties and concerns over previous definitions and their suitability within the industry.

The Zero Carbon Hub has been invited by CLG to work with the industry - house builders, planners, designers and material suppliers - to help agree a widely acceptable definition. Once established this will enable the industry to develop compliant solutions as early as possible and be better positioned to deliver mainstream zero carbon homes from 2016. The Zero Carbon Hub is therefore organising a series of events around the country to discuss the relevant issues addressed in the consultation, particularly:

Establishing a base level of CO2 reduction for all houses - a major debate is anticipated around what this base level might be. Government is proposing that three options are evaluated in the consultation - 44%, 70% and 100%;Establishing allowable solutions that enable a house to qualify for zero carbon status - a range of ‘allowable solutions' has been proposed for taking homes beyond the base level and up to zero carbon status (which includes all energy use in the home). The scope and treatment of these allowable solutions is central to the debate.

Where and when the events are taking place:

10 February: Leeds
11 February: Haydock
12 February: Birmingham
18 February: Peterborough
19 February: Heathrow
24 February: Bristol
25 February: Brands Hatch
27 February: Central London

to top EventsHBF ‘Building towards a brighter future' conference - Shapps and Kerslake to speak.

Tuesday 17 March 2009, Central London

Conservative shadow housing minister Grant Shapps heads a heavyweight list of speakers for this year's HBF Policy Conference including HCA chief executive Sir Bob Kerslake, CML director general Michael Coogan, housing expert John Callcutt, Zero Carbon Hub chief executive Neil Jefferson and, fresh from completing the Killian Pretty review David Pretty. Other speakers include Richard Donnell, Christopher Hill and industry recognised experts from HBF's own policy team.

The conference will be chaired by HBF executive chairman Stewart Baseley and will look at a range of issues and challenges currently facing the industry.

For more information and details of the full agenda please click here or contact the events team on 020 7960 1646 or events@hbmedia.co.uk

HBF Annual Industry Lunch 2009 - Beckett to address.

Wednesday 22 April, Hyatt Regency Hotel, central London.

Housing minister Margaret Beckett will address this year's HBF Annual Industry Lunch that will take place on Wednesday 22 April. The event provides a unique opportunity to catch up with colleagues and other leading industry figures following what has been a difficult year. Further details and a booking form are available please click here.

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

Hope Challenge: 12 - 14 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 next summer. Hope Challenge 2009 is a challenge event for teams of 3-6 people and 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 outdoors
Mental and physical team challenges
1 overnight shelter to build, and sleep in
1000m of hill ascent and 20 miles of trekking
A balance of fitness, strategy and team work

We are 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

to top

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/

to top

Rosie Hinchliffe

View Previous Weekly News Summary