HBF Weekly News Summary Friday 22 February 2008

Top Stories this week *Kate Barker comments on the housing market

Top stories this weekKate Barker comments on the housing market....read moreQuick LinksHousing Market NewsGovernment NewsEconomic NewsIndustry NewsHBF News

In a speech in North Staffordshire on 19 February, Bank of England Monetary Policy Member Kate Barker made the following comments on the housing market:

"While the outlook for house prices is always highly uncertain, it is likely that prices will decline in the short-term relative to earnings, and falls in nominal terms cannot be ruled out. An added uncertainty is whether consumers might respond proportionately more to downside news on house prices than to upside. There is only one recent study of which I am aware that investigates such asymmetric behaviour in the UK. This concludes that there was no significant tendency for spending to respond more to falling house prices than to rising. Indeed, to the extent that the large rise in house prices over the past decade has resulted in high levels of housing equity, there should be ample opportunity to borrow against housing equity for many even if house prices were to fall - in general the level of housing equity may be more important than the direction of change in house prices. It is worth noting that it has been calculated, on a very pessimistic assumption of a fall in house prices of 15%, that only 5% of mortgagors (around 2% of total households) would find themselves in negative equity. The constraint in present circumstances is more likely to be whether or not lenders are willing to meet the demand for borrowing."

View Kate Barker's full speech

Press reporting of her comments was generally more pessimistic than these remarks would appear to warrant.

The Rightmove House Price Index published on 18th February showed a bounce in housing market asking prices of £7,500 compared to the January index.

The asking price of the average three-bedroom semi-detached in England and Wales rose to £237,856 in January.

Rightmove said that despite the optimistic outlook there is evidence that the Government's controversial Home Information Packs are skewing the market and forcing up prices.

Commenting, Miles Shipside, Commercial Director of Rightmove said: "Most sellers obviously want to achieve as much as possible for their property, and traditionally they choose to test a more ambitious price early in the year as they have plenty of time to adjust it down later. This is compounded by estate agents being eager to have fresh property on their books and there being fewer to go round, leading to the temptation to try a higher figure. It's not the start of another price boom, but the interest rate cuts have no doubt given some sellers headier hopes. These are likely to prove to be unwarranted given the high level of existing property that is already on the market and the length of time that it has been there. "

February House Price Index

Major lenders Alliance & Leicester and Abbey both announced this week that they were ending deals under which borrowers could obtain finance equivalent to 125% of their property value. Such products have been targeted at first time buyers, providing them with funds to furnish and equip their homes and covering deposit, stamp duty and legal fees. On BBC Breakfast television coverage it was suggested that some 20,000 borrowers a year had been taking up such loans.

The move is another indication of the tightening credit position.

A review of the Government's existing target to reduce the UK's CO2 emissions by at least 60 per cent by 2050 will become a statutory duty under the Climate Change Bill, Environment Secretary Hilary Benn said on 18th February.

Mr Benn announced the decision alongside other amendments to strengthen the Bill as it moves towards completing its passage through the House of Lords.

The Government has committed to ask the independent Committee on Climate Change, headed by Adair Turner, to consider whether the 2050 target should be tightened up to 80 per cent, as the Committee considers its advice on the first three five-year carbon budgets.

View full press release from DEFRA

View Legislation "taking the Climate Change Bill forward"

Stewart Lilly, President of the National Association of Estate Agents (NAEA) has called on the Chancellor to use the March Budget to ease the immediate problems facing people in the housing market.

With first-time buyers being priced out of the market at the bottom end the NAEA has called for a revision to Stamp Duty and is proposing a new scale. It is also concerned that buy-to-let investors are being left out in the cold on Capital Gains Tax, which should be revised to create a better incentive, thus enabling investors to buy and sell property more easily, creating fluidity and variety in the market.

The NAEA's suggested Stamp Duty thresholds are:

"The government needs to be aware that with inflation rising consumers need a helping hand. We would like to see a scale of stamp duty that reflects the house price inflation in recent years. We would also like to see a revision of Capital Gains Tax for buy-to-let investors who are fast becoming the back-bone of the private rental sector," said Stewart Lilly.

The NAEA also wants to see VAT-free green policies. These should include no VAT on eco products - to promote energy efficiency and sustainability in the home - and lower tax on building conversions to match new-build status.

Following discussions between Ministers and Bill sponsor Michael Fallon MP, an amended version of the Planning and Energy Bill passed its Committee stage in the Commons this week. The amended Bill takes account of HBF concerns that it should not give councils powers to introduce Merton Rule style policies for on site renewable energy supply that go beyond the position set out in the recent PPS on Climate Change. We will continue to monitor the Bill's progress through Parliament.

Leeds Metropolitan University has now published its final report on the Partners in Innovation Project: CI 39/3/663 - Lessons from Stamford Brook - Understanding the Gap between Designed & Real Performance... This is a site of some 700 homes being built in partnership with the National Trust by Redrow and Bryant Homes (now Taylor Wimpey) to an enhanced energy performance standard, EPS08, which is 10-15% in advance of the 2006 Part L regulations.

The objective was not just to see how easily standard masonry construction could be built with an improved thermal performance but also to measure the difference between designed and actual performances and to identify ways of reducing this.

While the report makes several suggestions for improving various aspects of the construction process it concludes that the proposed 2010 amendment to Part L is achievable with standard construction techniques but there will need to be consideration of different techniques and adequate research into the engineering and chemical/physical processes involved if new housing is to meet the zero carbon target by 2016.

Read the report here.

Writing about the report, Charles Clover of the Daily Telegraph commented that Gordon Brown's promise to make new homes "zero carbon'' by 2016 was unlikely to be met because of "deeply embedded'' failings in modern house-building methods.

The Government's key adviser on housebuilding described as "disappointing'' news of a sharp drop in the number of new homes being constructed last year.

Steve Nickell, a former member of the Bank of England's Monetary Policy Committee who chairs the government-backed National Housing and Planning Advice Unit (NHPAU), was speaking after official figures revealed a major fall in the number of housing starts in 2007. In England, work started on only 40,735 new homes in the final quarter of the year - an 11pc fall on the same period in 2006, according to statistics from the Department for Communities and Local Government.

Commentators have noted that the fall, which means there were only 166,820 housing starts in 2007, undermines Gordon Brown's promises to build 3 million new homes by 2020, and the aspiration for annual homebuilding hitting 240,000 by 2016.

More information

Ecobuild returns to Earls Court, London between 26-28th February 2008.

The exhibition will be double the size with over 500 exhibitors, more than 75 free seminars and a series of new attractions linked to the key themes - zero carbon, water management and renewable energy.

With zero carbon legislation looming, Ecobuild's Road to zero carbon - realised as a series of external wall elevations - shows how different combinations of superstructure, insulation and cladding can contribute to a low carbon outcome.

It is anticipated that the Zero carbon house by Zedfactory, which will reach the Code for Sustainable Homes Level 6, will attract the most attention at the show. This teamed with the dedicated zero carbon seminar programme should assist with educating delegates on ways to meet the forthcoming challenges.

Register for your free invitation to the show now at www.ecobuild.co.uk

Visit the HBF stand at Eco-build - STAND E796

Sweden is at the forefront of developing technologies for energy efficient buildings and low/zero carbon homes - technologies that are increasingly in demand in the UK given the standards of the Code for Sustainable Homes. HBF is now helping to organise a seminar providing an opportunity to learn about new Swedish developments in R&D as well as explore potential research collaborations.

Confirmed speakers include;

This seminar is being arranged and funded by the Foreign Office Science & Innovation Network and UK Trade & Investment in association with The National Centre for Excellence in Housing and the Home Builders Federation.

Focus: Sustainable construction, low/zero carbon homes/district heating/combined heat and power/research and development
When: 17 March 2008
Where: London, Friends House, 173 Euston Road, NW1 2BJ (Euston Station)
Last registration: 10 March 2008

For more information or registration contact:

Heidi Hautajärvi: e-mail: heidi.hautajarvi@fco.gov.uk, tel +46 86713095
or
Heledd Poole: e-mail: heledd.poole@fco.gov.uk, tel: + 46 8 6713091

HBF Director of External Affairs John Slaughter met new Liberal Democrat Shadow Housing Minister, Lembit Opik MP, this week. Mr Opik was keen to receive HBF's views on the main issues, including zero carbon homes and the proposed Community Infrastructure Levy. He said he was seeking to review his party's housing policy in the run-up to the next General Election and welcomed policy inputs to this process.

HBF is reviewing its communications with members to ensure that we are providing information in the way you would like to receive it and which is most helpful to you and your business.

We are conducting a short survey to obtain member feedback on the HBF Weekly News Summary. All answers will be confidential; both the names of respondents and their companies will be kept private.

*All completed surveys returned by the February 29 will be entered into a prize draw to win a case of wine*

The survey is short and simple and takes just a couple of minutes to answer.

Please click here to complete the survey.

To ensure your feedback reaches us please complete by February 29. The winner of the prize draw will be announced in the Weekly News Summary on March 7.

The HBF Executive Chairman's Report for January is now available on the website (members only)

Click here to view the report

East Midlands Conference Centre, Nottingham

A one day conference and debate on the issues facing the industry for managers of regional businesses to attend with their senior team.

Confirmed speakers include:

Sunday Times, Economics Editor, David Smith
Market guru and HBF Economist, John Stewart
Places for People, CEO, David Cowans
English Partnership, Director of Policy, Steve Carr
HBF, Executive Chairman, Stewart Baseley
Stewart Milne group, Design Director, Ross Peedle

Plus

Barratt Homes, Senior Land Manager, Ben Cook and HTA, Head of Sustainability and Innovation, Rory Bergin talking about their winning Carbon Challenge scheme.

More information and to book

Austin Court, Birmingham

The Government is proposing major changes to the way that Building Regulations are enforced. These changes will affect everyone involved in house building - builders and developers, architects and designers, specialist consultants and building control professionals.

This conference sets out the reasons why change is thought to be necessary, why the current system doesn't appear to be working properly and what improvements the government would like to see.

Delegates will be able to contribute to the debate by challenging the views of the speakers and voting electronically

For further details or to book please contact the HBM Events Team on 0207 960 1646 events@hbmedia.co.uk

For other HBF events visit the website http://www.hbf.co.uk/index.php?id=eventsandmeetings

For HBM events visit www.hbmedia.co.uk

Jo Weston

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