Economy needs housebuilding budget boost

Tackling housing crisis would create 200,000 jobs

HBF: Urgent measures to dramatically increase housing supply and address the growing housing crisis must be included in next week’s budget. Providing desperately needed homes would create 200,000 direct jobs over the next year and stimulate growth giving the country a massive economic boost.

A year into office the Government is facing a huge housing dilemma. House building is at an all time low; planning permissions are continuing to decline; the number of first time buyers has collapsed; millions of families are languishing on Local Authority waiting lists; and there is an ongoing hiatus being caused by the Coalition’s radically different planning system that is still being formulated, with Local Authorities struggling to get to grips with the new incentive based proposals.

Housing projectMeanwhile, economic growth is crucial to the wider economy over the next few years. According to Government figures, even in its current crisis state, housing supply accounts for around 3% of UK GDP and provides between 1 and 1.25 million jobs in the UK.

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House prices fall for the eighth consecutive month

Experts predict prices will continue to fall as fewer people are getting loans and many are falling behind repayments

The average price of a UK home fell by 1.4% in January to £208,552 according to the Department for Communities and Local Government (DCLG).

The annual rate of house price inflation dipped to 0.5% in January, compared to 3.8% in December and a peak of 10.6% in May 2010, according to the DCLG house price index. It was the eighth consecutive month during which the annual rate of house price inflation has fallen.

Negative housing market data was also announced by the Financial Services Authority (FSA), which showed new loans to borrowers reached £37bn in the fourth quarter of 2010 – a drop of 10% compared to the previous quarter and an 11% fall compared to the final quarter of 2009.

The FSA said the number of new arrears cases increased in the final three months of last year to 38,800 – 6% higher than the previous quarter but still 5% below the 40,900 cases in the fourth quarter of 2009 . The total number of accounts in arrears at the end of 2010 was 343,400, unchanged from last quarter.

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House prices fall 2.8% year-on-year

Halifax house prices index shows decreases in yearly, quarterly and monthly measures giving an average house price of £162,657

House prices fell by 2.8% over the the year to February, according to the Halifax – the biggest annual fall since October 2009.

The bank reported a monthly change of -0.9% in house prices and a quarterly change – lenders’ preferred measure – of -0.4%, leaving the average house price at £162,657.

But Martin Ellis, housing economist for the Halifax, downplayed the falls saying there had been little change in house prices over the first two months of 2011, with this month’s 0.9% fall offset by January’s 0.8% gain.

“Overall, we expect a modest 2% decrease in house prices in 2011. Uncertainty over the economic outlook is likely to weigh down on housing demand this year,” he said.

“Fewer properties have been coming on to the market in recent months. This trend, if sustained, should improve the balance between demand and supply and help to prevent a more significant fall in house prices.”

The ratio of average house price to national average earnings for a male working on a full-time basis is also at its lowest point for a year, standing at 4.46 compare to 4.63 in February 2010.

Earlier this week, Robert Gardner, chief economist for Nationwide building society, said the low number of first-time buyers was “casting a shadow” over the housing market.

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Local Authorities losing millions

Research released today reveals that Local Authorities across the country are losing out on millions of pounds in central Government funding for failing to build the homes their areas need. At a time when all Local Authorities have seen their funding cut and are making difficult budgetary decisions, the new figures show that Local Authorities will in future be missing out on up to £27M a year by scrapping previous plans for homes or not building enough to meet the needs of their communities

The New Homes Bonus is a cornerstone of the new ‘localism’ based planning system. The Government hopes it will incentivise Local Authorities – who have already seen their general funding cut – to facilitate housing construction, enabling the Coalition to meet its objective of building more homes and alleviating the country’s growing housing crisis.

Last week Local Authorities across the country learnt for the first time how much they will receive from central Government this year for building homes. Some will gain over £4M in New Homes Bonus whilst others will receive nothing.

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Join the self build revolution

Raymond Connor of BuildStore Financial Services explains how the self build housing market, with new-found political support, is poised to become mainstream, and why lenders need to act now to benefit from high quality, low-risk lending in this sector.


Source: Mortgage Finance Gazette – 6th January 2011


Structural Warranty Insurance

Against the backdrop of a credit crunch, a recession, and a new government, the mortgage and housing markets have changed for good. With their weaknesses exposed, it is now time to consider the potential for new models of housing procurement, and the funding thereof.  The so-called ‘good times’ of the late 1990s to mid-2000s will never come back. And yet, they are still being used as a gauge for current progress, creating an unrealistic picture of the market going forward.

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