HBF Weekly News Summary Friday, 22nd October 2010

Friday, 22nd October 2010

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DCLG questions in the Commons

During oral questions to CLG Ministers in the House of Commons yesterday, Shadow Communities Secretary Caroline Flint said cuts to local authority funding would have an adverse effect on house building.

Housing Minister Grant Shapps said that the Coalition planned to build more affordable homes per year than Labour built annually in its 13 years in government.

Flint replied that the cuts were "the Government's choice" and that they had chosen to burden local communities.

Mike Freer (Con, Finchley and Golders Green) asked about incentives to encourage the building of new homes.

Grant Shapps said a 'new homes bonus' would be in place by April and would be paid for six years for each home

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Grant Shapps: Localism will drive up standards in social housing

Housing Minister Grant Shapps has this week set out how a new era of regulating social housing at the local level will deliver better homes for tenants, whilst at the same time ensuring lenders continue to invest in the sector.

Following the announcement last week that the Tenant Services Authority (TSA) would be abolished, a comprehensive report published this week explains how stronger powers for tenants will drive up the quality of their homes. Tenants can now expect local solutions to local problems - they will be able to set up local panels and call on their councillors and MPs to hold landlords to account to help resolve disputes.

The report, which follows a wide-ranging review of the TSA commissioned by Mr Shapps in June, also sets out how a new independent committee within the Homes and Communities Agency (HCA) will continue the economic regulation of social housing. The committee will make sure public spending on social housing is delivering value for money and lender confidence is maintained, ensuring that housing providers continue to secure significant private investment for affordable housing.

Mr Shapps said that following the abolition of the TSA, consumer protection and economic regulation of the sector would need different levels and styles of regulation, not a cumbersome bureaucratic approach directed from central Government.

Housing Minister Grant Shapps said:

"Social tenants know when things are going wrong with homes in their area. And when this happens, they want to be able to fix the problems quickly and easily, not sit around waiting for a remote inspection regime run from Whitehall.

"That's why we're changing how this is done. Consumer protection is going local - tenants will now be able to hold landlords to account with the help of their local representatives, and though panels that they set up and control themselves.

"At the same time the vital economic regulation of the sector as a whole will continue. The new regulator will be able to focus its energies on ensuring that taxpayers' money spent on social housing goes further, and give lenders the confidence they need to invest funds in building more social homes."

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Economic news

CML: September gross mortgage lending

Gross mortgage lending totalled an estimated £12bn in September, down 1% from £12.1bn in August and down 7% from September 2009 (£12.9bn). This is the lowest September total since 2000 (£10bn).

Gross lending in the third quarter of 2010 was an estimated £37.4bn, a 9% increase from the second quarter, but down 4% from the third quarter of last year.

CML Director General Michael Coogan commented:

"Lending volumes do not seem likely to increase substantially towards the end of the year. Funding pressures on lenders remain, and the practical implications of government and public spending cuts are beginning to emerge, with a resulting impact on consumer confidence.

"Despite the pressures on government finances, today's comprehensive spending review is no time to make further cuts in state support for borrowers in difficulty. A concerted effort by borrowers, lenders, the government and money advice agencies has helped to keep mortgage arrears and possessions in check during the current economic downturn. These support measures help contain the wider costs of homelessness, and deliver wider benefits to the government. Now is not the time to weaken the existing safety net."

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Bank of England: Trends in Lending October 2010

This publication presents the Bank of England's assessment of the latest trends in lending to the UK economy. It draws mainly on long-established official data sources, such as the existing monetary and financial statistics collected by the Bank. These data are supplemented by the results of a new data set, established by the Bank in late 2008, to provide more timely data covering aspects of lending to the UK corporate and household sectors.

The flow of net mortgage lending by all UK-resident mortgage lenders increased in August. Gross mortgage approvals for house purchase declined slightly in September according to data from the major UK lenders. In the 2010 Q3 "Credit Conditions Survey", a small balance of lenders reported an increase in the amount of new secured credit made available to households, though no change was expected in the next three months. Demand for secured credit for house purchase was reported to have fallen unexpectedly in 2010 Q3 and the major UK lenders expected demand for secured lending to remain subdued.

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Bank of England: Agents' summary of business conditions

With regards the housing market, the Bank's latest summary of business conditions based on its Agents' contacts and reports stated that activity had remained weak. Weaker potential purchaser confidence was noted, both in the macroeconomic outlook and the likely path of house prices, and this had started to weigh on demand, along with restricted availability of mortgages for first-time buyers. Most contacts expected house prices to stay flat or fall slightly in coming months, partly reflecting higher stocks of houses for sale. Rental demand remained strong as many potential first-time purchasers chose to rent instead, but robust supply growth of rental properties was limiting any increases in rents. Continuing low debt-servicing costs for some landlords had also helped to limit rent increases.

Other key points include:

Construction output was reported to be roughly on a par with last year's weak levels, but contacts feared a further decline in 2011;

Credit conditions had continued to improve marginally for larger and less highly-leveraged contacts, but demand for credit remained weak;

Private sector employment intentions had eased slightly after improving earlier in the year. Contacts remained very cautious about expanding the labour force.

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Bank of England: Minutes of the Monetary Policy Committee meeting

The Bank of England this week published the minutes of the Monetary Policy Committee meeting held on 6th and 7th October 2010 at which it was decided to maintain the official Bank Rate paid on commercial bank reserves at 0.5% and to maintain the stock of asset purchases financed by the issuance of central bank reserves at £200bn. The minutes state that:

"The news during the month had done little to alter the near-term growth outlook. Global activity data had been broadly as expected, and were consistent with a modest deceleration as the support from the inventory cycle faded. In the United Kingdom, activity had continued to recover from its depressed level. But that recovery seemed to be weaker in the second half of the year than it had been in the first…

"What was crucial for the policy decision was whether recent developments had affected the Committee's view of the balance of risks to the prospects for inflation in the medium term. As in previous months, there were two opposing key risks: on the one hand, whether the prolonged period of above-target inflation would cause inflation expectations to drift up, making it more costly to bring inflation back to target; and, on the other, whether private demand would grow insufficiently rapidly to replace the waning boost from the inventory cycle and public spending, resulting in a persistent underutilisation of resources that could cause inflation to fall materially below the target in the medium term."

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Industry news

CLG: Net supply of housing 2009-10, England

The latest England net supply of housing statistics produced by Communities and Local Government were released this week.

The latest statistics report on net supply of housing up to the 2009-10 financial year and update those previously released on 25th February 2010.

Key points from the latest release are:

Annual housing supply in England reached 128,680 net additional dwellings in 2009-10. This is a 23% decrease on the 166,570 net additional homes supplied in the previous year, and the lowest annual level of net housing supply since 2000-01;

In 2009-10 97% of net additional dwellings were accounted for by new build completions, similar to last year when new build completions comprised 95% of net additional dwellings;

Fewer net additional dwellings were supplied in the 2009-10 financial year than in the previous year in every English region. The North West saw the largest annual decrease (38%), followed by the South East (32%).

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HBF response to CLG housing figures: Record low housing numbers reveal scale of the crisis

HBF issued a press release to the media following the publication of the figures;

Figures released this week reveal that the net number of homes added to the housing stock in England fell to a record low in 2009-10, down 23% on 2008/9.

Just 128,680 net additional dwellings were provided last year compared with around 167,000 in 2008/9. This figure is even lower than the previous record low of 130,510. Fewer net additional dwellings were supplied in the 2009-10 financial year than in the previous year in every English region. The North West saw the largest annual decrease (38%), followed by the South East (32%).

The figures published by the DCLG came just a day after the current Government announced large cuts to housing budgets in their spending review. House builders across the country have been warning the Coalition that action is needed to halt the decline and avoid deepening the housing crisis.

They have warned that having scrapped housing targets five months ago there has not been a quick enough introduction of the promised national planning framework and house building incentive –The New Homes Bonus.

This hiatus has been exacerbated by falling mortgage availability and yesterday's announcement that Government housing funding has been slashed has added to fears.

Stewart Baseley, Executive Chairman of the HBF, said:

"There is no doubt that the previous planning system was not succeeding in delivering enough homes – but housing delivery, crucial to solving the housing crisis, is not yet increasing and in many areas has actually fallen.

"These figures reveal the extent of the housing supply problem and the need for real action now – cutting red tape and implementing incentives so we can build the homes the country needs."

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Hometrack: Shared equity – short term support or a longer term feature of new build sales

Following his presentation at the HMI conference, Richard Donnell, Head of Research at Hometrack, wrote in an article this week that:

"The past two years have been characterised by a lack of mortgage finance for first-time buyers and the repercussions have hit the house building industry hard. The industry has responded in several ways. In an effort to appeal to those who require a small mortgage or no mortgage at all the mix of housing being developed has changed – from small apartments to larger family houses. While this may have provided a short-term fillip, a question mark remains over the sustainability of this approach. The cost and availability of land are likely to act as a growing constraint to the development of family housing.

"Builders have also looked to shared equity products to help support first-time buyer sales and we estimate that these have accounted for more than 10% of all new build sales in the last year. For some of the large nationals the proportion has been up to 30% through a combination of Government and own-brand schemes. The major sales challenge facing house builders is how to meet first-time buyer demand when mortgage availability continues to be one of the biggest barriers to homeownership. The reality is old style first-time buyer lending at 90% loan-to-value ratios is many years off. Product innovation is paramount if builders are to maintain levels of output which remain low by historic standards"

Mr Donnell concludes:

"All in all shared equity has clear advantages for sales teams but the capital hungry nature of this product is less attractive to finance directors. The HCA and the HomeBuy Direct product have provided a major support to the development industry enabling developers to maintain development of higher density housing. The industry is desperately keen to gain a further round of funding as reliance on own-brand schemes will be costly and constrain the potential size of the market.

"Balance sheet issues aside, it seems as though regulatory and consumer side risks are significant. The net result is likely to be a growing shift towards less capital intensive insurance schemes and where greater demand will result in more competition. Longer-term part-ownership solutions are likely to play a greater role as Government policy looks to encourage homeownership and the strategic opportunity for house builders lies in linking this to planning and the delivery of affordable housing where part ownership can open up the pool of demand and drive greater certainty for sales."

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NHBC sees registrations dip

The number of new NHBC registrations dipped from 9,954 in August to 9,033 in September, according to NHBC's latest figures.

NHBC said that the industry was still waiting for traditionally strong Autumn sales to boost house building quotas. Chief executive Imtiaz Farookhi commented:

"Despite a strong performance in Spring of this year, registration levels during the Summer flattened out and there hasn't been the traditional Autumn uplift that many in the industry were hoping for."

Registration figures are still up from last year. From July to September 2010, private sector registrations climbed 32% to 20,594 against the same period in 2009.

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HCA publishes investment data

The Homes and Communities Agency (HCA) has published a detailed breakdown of its investment programme across England for the financial years 2009/10 and 2008/09.

The data, which details investment by local authority area, reveals that the government's national housing and regeneration agency invested more than £5.433bn in total during 2009/10 and more than £2.190bn in the first four months of its existence between December 2008 and March 2009.

The biggest single programme during 2009/10 was the National Affordable Housing Programme, totalling more than £3.633bn of investment across England.

During 2009/10, as well as investment within individual local authority areas, each region attracted some additional spend across a range of programmes, namely Property and Regeneration; SHESP (Social Housing Energy Saving Programme) and CIF (Community Infrastructure Fund) that cannot be attributed to any single local authority.

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Andrew Stunell: Farmers should be able to offer affordable homes on the farm

Councils should look to amend their existing planning policies to make it easier for disused farm buildings to be converted into affordable homes said Communities Minister Andrew Stunell.

The average house price in rural England has more than doubled over the past decade to over £250,000, but the average salary is still £21,000. The numbers of people on social housing waiting lists in rural areas has risen to 750,000.

So Mr Stunell has called on farmers to identify disused farm buildings that could be converted into new affordable homes for local people, and for councils to look favourably on their planning applications.

It fulfils a key Coalition Agreement commitment to enable the building of Homes on the Farm, by encouraging the redevelopment of disused agricultural buildings as new and affordable housing.

He said:

"Farmers are the custodians of our countryside, managing thousands of acres of rural land across England. But when they want to make disused buildings available for new homes, they can often face an uphill battle to get planning permission in the face of their council's development plans.

"As more young people are unable to afford to live in rural areas and village schools, shops and pubs struggle to survive, farmers are ideally placed to help bring the community together to help reverse this trend.

"That's why I want to make it easier for farmers to offer Homes on the Farm for local people. One small step for councils will offer a significant opportunity for communities to get the new and affordable homes their villages need. I want farmers to take their place at the forefront of this rural revolution alongside their local councils, to make farm buildings available, and to work with their local communities to shape the sustainable development of their countryside so it can remain a vibrant place to live for generations to come."

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Housing market news

Rightmove: October sellers struggle to adjust to new market conditions

The latest Rightmove house price index, published this week, reported that:

Market fundamentals remain poor as property per branch rises from 69 in October last year to 78 now and mortgage availability continues to deteriorate;

However, 105,769 new October sellers asked £7,082 more for their homes than last month's sellers;

Bullish pricing is a normal characteristic of the autumn selling season with average asking prices increasing in every October for the past decade;

Vendors struggle to react to the increasing stock as most are unwilling or unable to adjust to new market conditions;

Post-Home Information Packs, speculative sellers can now test the market at minimal cost;

Disappointment is the likely outcome for many sellers as evidence shows high launch price damages chances of securing a later sale.

Miles Shipside, Director of Rightmove, comments:

"Given the challenges of the current market, the behaviour of sellers in raising their average asking prices by over £7,000 takes some explaining. Every year, vendors coming to market after the summer holidays hope to take advantage of any positive price impetus from buyers who are keen to be in a new home before Christmas. Between 2007 and 2009, October sellers tried higher prices in spite of the 'credit crunched' housing market, and it's a habit that is proving hard to kick in the 'spending review' market of October 2010. It's not likely to be a successful tactic, though it is a sign that many sellers are not experiencing high levels of financial stress but can't afford to accept a lower price if they are to make their sums stack up for the next move".

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CML: Only a quarter of all new home loans in August were for remortgage

Remortgaging accounted for only 25% of loans in August, the lowest proportion in over 10 years, according to the latest survey data from the Council of Mortgage Lenders.

August saw 25,000 remortgage loans, worth £3bn, advanced by lenders. The number of loans was down 13% and the value down 14% from July. Both were 19% lower than a year ago. With interest rates expected to remain low for some time yet, there is little incentive for borrowers to move away from low reversion rates at the end of tie-in periods. And continuing tight credit conditions mean that some borrowers are unable to access new refinancing deals. So there is little prospect of a significant rise in remortgaging in the coming months.

There were 51,600 house purchase loans (worth £7.7bn) advanced in August, a fall of 8% (by volume and value) compared to July. While this is in line with the usual summer lull in market activity, a rise of 3% (by volume) and 12% (by value) from August 2009 shows that 2010 house purchase lending is still proving slightly more robust than the low levels in the equivalent months of 2009.

The 18,300 loans (worth £2.3bn) advanced to first-time buyers in August represented a decline of 5% (by volume) and 4% (by value) from July. First-time buyer loans were also down 3% by number, but up 5% by value, compared with August last year. Deposit criteria for first-time buyers have varied a little on a monthly basis throughout the year to date, and appear to have eased again somewhat in August. First-time buyers in August put down on average a 21% deposit, compared to 24% in July.

CML Director General Michael Coogan said:

"August is a traditionally slow month for mortgage lending and it was no different this year. We expect a quiet market to continue for the foreseeable future. While we do not know what the impact of the comprehensive spending review will be on our sector, it will clearly contain austerity measures that will likely further dampen consumers' appetite to borrow.

"We would expect lending to slow more significantly, year on year, as we head towards the end of the year, and it is unlikely that the uncertain environment will encourage a tick up of mortgage activity in 2011. With some uncertainty surrounding future house price trends, we would expect a muted market in the next few years. The problem of excess capital, that led to record lending and borrowing in 2007, has self corrected and will not return."

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HBF news

HBF member briefing: the 2010 spending review

This briefing note produced by the HBF summarises the main announcements relating to housing made by the Chancellor of the Exchequer in his statement to Parliament today on the Government's Spending Review for the four years from 2011/12 to 2014/15

Please click here to view*

*member only content, please remember to login

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HBF member briefing: Mortgage outlook

Following the focus on mortgage market issues at last week's Housing Market Intelligence conference, HBF has prepared a member briefing which summarises the current position.

Please click here to view*

*member only content, please remember to login

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Events

Housebuilder Awards 2010 – Huw Edwards to host.

The Housebuilder Innovation awards, that takes place next thursday on 28th October, will this year be hosted by prominent national tv broadcast journalist Huw Edwards.

Now in its sixth year - the prestigious awards bring together the best of innovation and excellence in the house building industry.

The awards are the highlight of the house building calendar, celebrating the very best of the industry and recognising the achievements of those leading the way in innovation. This year the winners will be announced at a glamorous black tie event at the Millennium London Mayfair Hotel.

To see the full shortlist for this year's Housebuilder Awards please visit http://www.house-builder.co.uk/awards/

For all booking enquiries please contact the events team on 020 7960 1646 or events@house-builder.co.uk

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HBF Ball – Friday 10th December, London.

The HBF Ball will this year take place on Friday 10th December. Traditionally the social highlight of the industry's year it will take place at the Marriott Grosvenor Square, London. Starting with a fantastic reception, the evening includes a three course meal, live music and dancing till 2am. It's the perfect way to start your Christmas celebrations and the ideal time to catch up with industry colleagues.

The supported charity for this year's Ball is Habitat for Humanity

The HBF Ball is kindly co sponsored by H+H and Ibstock Brick.

For more details please click here or email events@house-builder.co.uk for a booking form.

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HBF Technical Conference, Birmingham, Tuesday 9th November

Redefining the regulatory maze.

This year's HBF Technical Conference will this year look at the regulatory burden facing the industry. Discussing the forthcoming changes in the building regulations, the Code for Sustainable Homes and the Flood and Water Management Act.

Please click here to book online or download a booking form. Call 020 7960 1646 with any queries.

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Nearer to Zero: Planning for zero carbon homes. Wednesday Nov 24, Woking.

This one day conference the HBF is supporting and helping organise with the Zero Carbon Hub, Woking Council and the Planning Officers Society will bring developers and planners together to discuss how to deliver future low and zero carbon housing and to improve understanding of each others' issues and perspectives.

The event will also include presentations from house builders Lacey Simmons and Barratt on their approaches and experiences in building to lower carbon standards.

The learning benefit gained by any individual attending this event can be evaluated and recorded in line with the CPD requirements of their professional body or institute.

Please click here for more information and details of how to book

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For other HBF events visit the website

For HBM events visit

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Rosie Hinchliffe

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