HBF Wales Weekly News Summary Friday 6 March 2009

Friday, 6th March 2009Top stories this weekGovernment response to the Killian Pretty Review.....read more Halifax house price index.....read more

Bank of England reduces Bank Rate by 0.5 percentage points to 0.5% and announces £75bn Asset Purchase Programme.....read moreBank of England: Lending to individuals January 2009.....read moreQuick LinksWales news Government and political news Housing market news Economic news HBF news Events Wales newsWelsh Assembly Government £49m investment in skills and education

A £49m initiative to help around 30,000 young people in Wales improve their career opportunities has been announced by Deputy First Minister Ieuan Wyn Jones and Education Minister Jane Hutt.

The Reach the Heights projects have been awarded £27m of European Social Fund resources plus match funding from the Welsh Assembly Government and associated sponsors to take forward the programme in Wales. It aims to target 11-19 year-olds across West Wales and the Valleys to help them build a brighter future and prevent them from becoming NEET (Not in Education, Employment or Training)

Conservative party new shadow cabinet

Leader of the opposition Nick Bourne AM announced his new shadow cabinet.

Key winners being Paul Davies AM (who adds Education to his pre-existing portfolio over the Welsh language) and Andrew R T Davies AM who will now hold the portfolio of Health.

to top Government and political newsGovernment response to the Killian Pretty Review

The Department of Communities and Local Government (CLG) has published a document setting out the Government's response to the Killian Pretty Review final report. In response to the recommendations the Government has proposed a programme of measures to create a planning application process which is more proportionate, that operates more efficiently and effectively and is more easily understood by all involved.

Download a copy of the response

to topDavid Pretty's reaction to response

Following publication of the response, David Pretty, Chairman of the New homes Marketing Board and HBF Board member said:

"I'm very pleased to see that the Government has responded so positively to our recommendations because it is very important that we do all we can to ensure new development isn't caught up in unnecessary red tape.

"Of course the Government will have to consult on how best to implement our recommendations but it's already widely acknowledged that the need for reform is urgent so I would urge that everything possible is done to make the changes as quickly as possible. The benefits - for local communities and businesses large and small - could be substantial. It's also vital to help the economy climb out of recession."

HBF warns Government to stick to timetable set out in Killian Pretty response

In its press statement on the Government's response, HBF welcomed the fact that the Government is clearly taking the recommendations made in the Killian Pretty Review seriously, but emphasised the measures proposed must be implemented promptly and in full if they are to make any significant improvement to the planning application process, and so speed up housing delivery.

HBF called for all parties to work together to ensure the 17 recommendations made in the original review are implemented in as timely manner as possible. In addition there should be a particular focus on the items that will assist housing delivery in the current climate, such as allowing minor amendment of permissions and ensuring the amount of information required to be submitted with planning applications is proportionate.

Andrew Whitaker, HBF's Planning Director said:

"We are pleased to see that the Government is taking the Review findings seriously and seeking to address the 17 recommendations in considerable detail. Many of the recommendations require changes to current practice and culture rather than legislation or regulation and can be implemented almost immediately. Where further studies and consultation needs to take place these should be done as soon as possible.

"Clearly, everyone involved in the development management process has a role to play in such change whether they are local authority officers or members or applicants and agents. HBF and its members will, of course, be keen to assist in the implementation of change to the planning application process."

to topCommunities and Local Government's Departmental Annual Report 2008

Communities and Local Government Select Committee has published the ‘Communities and Local Government's Departmental Annual Report 2008' which looks into the work of the Department over the last year. The report argues that "despite improvements in effectiveness, delivery is still patchy" as shown by the Department of Communities and Local Government's problems in implementing key policies such as eco-towns, the Decent Homes programme and Home Information Packs.

Download a copy of the report

Mayor of London: Millions to help first-time buyers

The Mayor of London, Boris Johnson, and the Homes and Communities Agency (HCA), have unveiled a multi-million pound initiative which aims to help thousands of Londoners to get onto the property ladder as well as providing millions of pounds to kick start affordable housing developments that have stalled during the economic downturn.

The funding package will deliver around 3,000 new affordable homes for Londoners across a range of sites, and is also kick starting the Mayor's ‘First Steps', low cost home ownership initiative, a major manifesto commitment. First Steps is designed to promote a range of products that help more Londoners to own their own home by offering a flexible alternative to the full expense of open market options. The Mayor said:

"London is taking the first major step and leading the way in tackling this housing crisis as we begin the process of helping thousands of Londoners who have been left stranded for so long in both boom time and now during the downturn.

"The money we are investing today is also a major shot in the arm for London's development sector and the economy. As this rolls out thousands of construction sector jobs will be saved but more importantly the sector will emerge strong to build and grow London when the recovery comes."

to top Housing market newsHalifax house price index

The Halifax house price index, published this week, reported that:

The price of an average house declined by 2.3% in February. This fall more than offset January's 2.0% increase (revised from 1.9%);

House prices in the three months to February compared to the previous three months - an indicator of the underlying trend - were 3.6% lower. This was slightly below the quarterly rate of decline of 5-6% recorded consistently between June 2008 and January 2009;

House prices in February were 17.7% lower on an annual basis. The annual rate of change (measured by the average for the latest three months against the same period a year earlier) fell from 17.2% in January to 17.7%. The UK average price has returned close to the level in August 2004 (£159,799);

The house price to average earnings ratio has declined from a peak of 5.84 in July 2007 to an estimated 4.42 in February 2009; a fall of 24%. The ratio is at its lowest level for six years (February 2003: 4.41). The long-term average was 4.0;

There were tentative signs of a stabilisation in activity, albeit at a very low level. Bank of England industry-wide figures showed that the number of mortgages approved to finance house purchase was unchanged between December 2008 and January 2009. Approvals in January, at a seasonally adjusted 31,000, were also identical to the monthly average recorded in the second half of 2008.

Download a copy of the Halifax house price index

to topHometrack: Market activity is up but off a level 60% lower than last year

Richard Donnell, Director of Research at Hometrack, reported this week that following a weak end of 2008, February saw an increase in levels of market activity - albeit off a very low base. Despite this, house prices in February continued to fall - on average by 0.8%. Over the last 12 months average residential prices have fallen by 10%. Prices fell across 59% of the country.

Richard Donnell also said that levels of buyer registrations, sales agreed and new instructions all increased in February, reversing a downward trend seen over recent months. New buyer registrations rose by 17% while sales agreed increased by over 35%. There was also a modest increase in the supply of homes for sale which grew by 6.7%. Southern England - London, the South East and the South West - saw the strongest demand.

This seasonal spike in market activity remains some 60% lower than the same time last year. An uncertain economic outlook and the prospect of further price falls mean that many people are choosing to simply not move. Hometrack's assessment is that demand for housing does exist but not at the levels seen two or three years ago.

RICS: Mortgage credit availability is likely to be the key driver of housing market activity

The RICS European Housing Review 2009, published this week, reported that with house prices falling across all European markets by the end of 2008 and prospects for 2009 even gloomier, the revival of European housing relies on the ability of European governments to cope with the mortgage credit shortage and on the scale and duration of the economic recession.

The report's author, Professor Michael Ball, said:

"The world financial crisis and economic downswing have hit European housing markets badly. Some countries, like Ireland and the UK, led the decline but by the last quarter of 2008 the effects had spread across Europe. Given the broader context in which these housing market downturns are taking place, there is greater synchronisation of housing market decline in Europe than has been seen in the past and there are going to be some tough times before marked recovery occurs."

Simon Rubinsohn, Chief Economist of RICS, commented:

"The tightening in lending criteria by banks over the past year is now having a meaningful impact on a number of European housing markets. In addition, sentiment is clearly being affected by the worsening economic climate. As a result, activity levels will continue to weaken through much of 2009 and prices look set to fall further in most markets. Ensuring a ready flow of mortgage finance needs to be an important priority for European governments but the key to providing support for property markets across the region is effective measures to underpin the economy."

Download a copy of the report

to topKnight Frank global house price index, Q4 2008

The global house price index produced by Knight Frank this week reported that:

The impact of the credit crunch has now affected virtually every global housing market;

Over 80% of the locations in the global house index recorded negative price growth in the final three months of 2008 compared with 27% in Q4 2007;

Although house prices did increase by over 10% in seven countries (all within EMEA) during 2008, values have now started to fall in six of these;

Dubai was the strongest performer in 2008, rising by almost 60%, but much of this gain may well be wiped out in 2009;

Latvia saw the biggest annual and quarterly falls, with prices plummeting 16% in the final quarter of 2008 and 33.5% overall.

Nicholas Barnes, Head of International Residential Research, Knight Frank, commented:

"Predicting how much further markets will fall during 2009 is virtually impossible. While every market is being buffeted by the contagion effect of the global economic downturn, the scale and the duration of the impact upon individual countries will vary. It is not safe to conclude that just because one country entered the downturn ahead of another, that it will automatically recover more quickly.

"The current downturn is unlike any other we have ever witnessed in both scale and causes. Experience of previous downturns, while potentially helpful, will not necessarily provide us with an accurate picture of when and how markets will emerge from the crisis - nor will pre-conceived ideas or hubris.

"This year is likely to be a more difficult than 2008, however there is a "consensus of hope" that the trough of the current cycle will be reached in 2009, although a bounce-back is not anticipated and the current fragility of markets could be exposed by further bad news from the financial sector or indeed the underlying economies. At some point, however, buyers will decide that price falls in many markets represent once-in-a-generation opportunities that are too good to pass up."

to top Economic newsBank of England reduces Bank Rate by 0.5 percentage points to 0.5% and announces £75bn Asset Purchase Programme

The Bank of England's Monetary Policy Committee have voted to reduce the official Bank Rate paid on commercial bank reserves by 0.5 percentage points to 0.5%, and to undertake a £75bn programme of asset purchases.

The Committee agreed that the Bank should, in the first instance, finance £75bn of asset purchases by the issuance of central bank reserves. The Committee recognised that it might take up to three months to carry out this programme of purchases. Part of that sum would finance the Bank of England's programme of private sector asset purchases through the Asset Purchase Facility, intended to improve the functioning of corporate credit markets. But in order to meet the Committee's objective of total purchases of £75bn, the Bank would also buy medium- and long-maturity conventional gilts in the secondary market. It is likely that the majority of the overall purchases by value over the next three months will be of gilts.

At its future meetings, the Committee will monitor the effectiveness of this purchase programme in boosting the supply of money and credit and in due course raising the rate of growth of nominal spending, adjusting the speed and scale of purchases as appropriate.

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

John Stewart, HBF's Director of Economic Affairs, appeared on the Bloomberg financial TV channel as the Bank Rate cut was being announced. He made the point that Bank Rate is no longer the significant issue. What is important is the rate being charged by mortgage lenders, especially to borrowers with higher LTVs. He also raised concerns about the impact of low rates on the ability of banks and building societies to attract savings, and so fund mortgage lending. He stressed the importance of ensuring the success of the Government scheme to guarantee mortgage-backed securities as a mechanism to restore mortgage lending levels. The Treasury has said the scheme will be introduce in April.

to topCML reaction to rate cut

Responding to the decision to reduce the Bank rate by 50 basis points to 0.5% Michael Coogan, CML Director General said:

"This latest cut presents immense challenges for lenders whose margins are already squeezed as a result of previous reductions, leaving little scope to lower discretionary mortgage rates further.

"Savings are the lifeblood of mortgage lending, and unless lenders can offer competitive rates to savers their ability to offer new mortgages is restricted.

"National Savings and Investments this week reported record inflows of savings, sucking more money out of the mortgage market, so today's cut represents a double whammy for prospective mortgage borrowers."

NAEA: Liquidity not interest rate cuts will make the difference

Gary Smith, Vice President of the NAEA, commented:

"Interest rates can go down to 0% and I'm afraid it will make absolutely no difference. What is desperately needed now is more liquidity in the market and more mortgage lending.

"Reducing rates does nothing to boost confidence of savers and does nothing to help those that the banks are refusing to lend to. I am yet to be shown the impact that reducing rates has made during the credit crunch. Whilst it has assisted thousands of homeowners in lowering mortgage repayments, which of course can only be a positive, it has in fact done nothing to improve fluidity in the housing market.

"What we need is an increase in the number of mortgages available at sensible rates with limited deposits."

Bank of England: Lending to individuals January 2009

The Bank of England reported this week that the increase in total net lending to individuals in January (£1.1bn) was lower than the December increase and the previous six-month average. The twelve-month growth rate continued to fall, by 0.5 percentage points to 3.1%, and the three-month annualised growth rate slowed by 0.1 percentage points to 1.3%.

Within the total, the increase in net lending secured on dwellings (£0.7bn) was lower than the December increase and the previous six-month average. The twelve-month growth rate continued to fall, by 0.6 percentage points to 2.8%. The three-month annualised growth rate was unchanged at 1.1%. The numbers of loans approved for house purchase (31,000) and for other purposes (33,000) were in line with December figures. The number of loans approved for remortgaging (34,000) was lower than in December.

The increase in net consumer credit in January (£0.4bn) was above the increase in December but below the previous six month average. Net credit card lending increased by £0.3bn and net other loans and advances rose by £0.1bn. The annual growth rate of consumer credit continued to slow, to 4.6%; the three-month annualised growth rate fell by 0.4 percentage points, to 2.4%.

to topCIH: Gloomy economic forecast for housing sector

Speaking at a Chartered Institute of Housing conference, Roger Bootle, head of economic forecasting agency Capital Economics has forecast that the UK will remain in recession until at least 2011 and predicts the housing market will continue to struggle with rising repossessions, growing negative equity and poor access to finance.

Mr Bootle suggested that around 3.5 million households will fall into arrears - twice the level of the early 1990's - and mortgage repossessions could rise as high as 90,000 this year. He forecasted that the economic downturn will be the worst since the post-war economic slump of 1945-48, and is only likely to recover from 2011 at a very slow rate.

He also forecasted that house prices would continue to fall throughout 2009 with an overall housing market correction of between 40-45%. But he indicated the biggest fall would come from residential land values, which he forecasted to fall by around 70%.

Mr Bootle also suggested that the ‘culture of homeownership' was ‘part of the problem, not the solution' and Government should stop ‘pandering to owner-occupation'. He said: "We can't all get rich by buying and selling each other's houses".

to top HBF newsNew Home Valuation

On 2nd April, HBF will be hosting a morning roundtable discussion with representatives of the RICS to discuss a forthcoming RICS guidance note on new home valuation in Central London. HBF members attending will see an advance copy of the guidance note. Anyone wishing to attend should contact: rosie.hinchliffe@hbf.co.uk - although please note that places will be limited.

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

Tuesday 17th March 2009, Central London

Conservative Shadow Housing Minister Grant Shapps heads a heavyweight list of speakers for this year's HBF Policy Conference that includes 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 economic experts Richard Donnell and Christopher Hill who will be joining HBF's John Stewart to further develop issues raised in a highly successful session at last year's Housing Market Intelligence conference.

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

Zero 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

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

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