Investment
Builders welcome UK govt plan to commission new homes
The UK Government, which has announced that it will directly commission the building of thousands of new homes, is being urged to offer small sites for the plan. According to the Federation of Master Builders the availability of small sites is the greatest barrier currently faced by SME house builders when it comes to delivering new homes and it hopes the building of 13,000 new homes on public land will alleviate the problem. ‘The Government clearly recognises that we need to bring more small house builders back into the market if we have any hope of addressing the housing shortfall. Directly funding developments on publicly owned land, with planning permission already granted, should encourage growth of smaller builders and new entrants into the market,’ said Brian Berry, chief executive of the FMB. ‘The public land that is being made available through direct commissioning must be broken down into small and micro plots wherever possible. As the Housing Minister himself has recognised, the smaller the site, the quicker it will get built out,’ he explained. ‘If the Government wants to truly tap into the potential of SME house builders, it should bring forward a wide range of packages of land, including those attractive to the smallest of developers, thereby improving both capacity and speed of delivery,’ he pointed out. ‘As positive as this development is however, it remains only one piece of the jigsaw. The on-going skills shortage is as pertinent for local firms as it is for larger contractors. We desperately need more skilled tradespeople in the industry, otherwise even supportive plans such as those announced today will be challenging for builders to deliver. Boosting apprenticeship training among construction SMEs will be crucial to this,’ he added. The move has been welcomed by the Home Builders Federation (HBF) but it added that allowing smaller builders to access publicly owned sites must be part of wider set of measures to assist SME builders and get more 'players on the pitch'. ‘Increasing the amount of developable land with planning permission is essential if we are to increase output further. Bringing forward public land more quickly has long been a priority for successive Governments, so concrete measures to achieve this are welcome,’ said executive chairman Stewart Baseley. ‘Direct commissioning will only be successful if it speeds up the release of public sector land and results in more house building than would have happened using the more traditional methods of public sector land disposal,’ he added. He also pointed out that a lower risk model could allow larger builders to increase their output still further, while also enabling smaller house builders to increase output and both have an essential role to play. It is not a question of either/or. ‘We desperately need to increase supply even further and faster than the current rate of increase, and speeding up delivery of public sector sites can play an important role in achieving this. In addition, if Starter Homes… Continue reading
Annual property rental values in prime central London fell last month
Annual rental value growth in the prime central London residential property market eased to 0.7% in December on the back of falling demand in the financial services sector. Rental values fell 0.4% from November, taking the annual rate of growth to its lowest level since July 2014, according to the latest analysis report from real estate firm Knight Frank. However, Tom Bill, head of London residential research at Knight Frank, explained that there is also an element of seasonality and a quarterly drop of 1.1% in the last three months of the year was the weakest since December 2014 and repeats a pattern of previous years. Rental value growth peaked in May this year at 4.2% and the subsequent decline has resulted in prime gross rental yields dipping from 2.96% to 2.93% over the same period, the report says and demand has fallen over the last six months as a number of banks have implemented restructuring plans. ‘European banks in particular have been slower to cut jobs than their US counterparts following the financial crisis. Profitability has fallen due to new regulations that force banks to hold more capital, which has contributed to job cuts at European banks that have been in excess of 100,000 in recent months,’ said Bill. ‘As well as the macroeconomic backdrop, including uncertainty over China and falling commodity prices, the situation is compounded by the fact many large European banks have new chief executives, who typically take a more radical approach to cost savings in the early stages of their tenure,’ he pointed out. ‘The result is that optimism at financial services companies fell markedly in the third quarter of this year across a range of sectors. However, there have been signs of stronger demand from boutique financial services companies like private equity businesses and hedge funds as clarity emerges surrounding the level of 2016 bonus packages,’ he added. The report also says that demand at the super prime level of £5,000 plus per week remains strong as uncertainty continues to surround taxation and price growth in the higher price brackets of the sales market. ‘Equally, demand remains strong in lower price brackets among workers of all professions, bolstered by the strength of the UK’s economic recovery,’ Bill said. Continue reading
Pending home sales in the US down slightly, latest index data shows
Pending home sales in the United States fell slightly in November for the third time in four months as buyers continue to battle both rising home prices and limited homes available for sale. Overall modest gains in the Midwest and South were offset by larger declines in the Northeast and West, according to the latest pending home sales index from the National Association of Realtors (NAR). The forward looking indicator based on contract signings decreased 0.9% to 106.9 in November from an upwardly revised 107.9 in October but is still 2.7% above November 2014. The data also shows that although the index has increased year on year for 15 consecutive months, November’s annual gain was the smallest since October 2014 when it was 2.6%. Lawrence Yun, NAR chief economist, said that November's dip in contract activity continues the modestly slowing trend seen ever since pending sales peaked to an over nine year high back in May. ‘Home prices rising too sharply in several markets, mixed signs of an economy losing momentum and waning supply levels have acted as headwinds in recent months despite low mortgage rates and solid job gains,’ he said. ‘While feedback from realtors continues to suggest healthy levels of buyer interest, available listings that are move-in ready and in affordable price ranges remain hard to come by for many would be buyers,’ he pointed out. Continue reading
