Residential development

Land values stabilise across most UK regions

The value of residential development land has stabilised across most UK regions after five negative quarters according to Knight Frank’s Residential Land Index.

It shows that the average value of both urban and greenfield land rose by 2.1 per cent during the second quarter of 2009, having almost halved since 2007, reflecting greater activity and confidence among developers.

Housebuilders and residential developers now account for 16 per cent of purchasers, up from 8 per cent during the first quarter and are no longer the biggest group of vendors.

They have been overtaken by the public sector as the most important source of new sites. It said that the supply of sites remains highly constrained, with owners dissuaded by sharply lower values.

In the three months to June, average land values in every region outside London showed modest increases. According to Knight Frank after five quarters in which land values almost halved, it appears that the market is now beginning to recover, not just because of the stable pricing in many regions but also because housebuilders and developers are increasingly becoming acquisitive.

Housing private finance initiative

Government allocates £1.7bn for new homes

The Housing Minister John Healey recently announced £1.7bn funding to build 11,200 new homes and regenerate 10 of the most deprived areas of the country. Ten local authorities in six regions are to receive the cash under the housing private finance initiative (PFI) in order to allow them to deliver 4,500 new or improved council homes and 1,600 new affordable rented homes.

The investment is expected to create 20,000 jobs in the building industry.

The Minister also said that the Homes and Communities Agency (HCA) had released over £300m in the last month to 50 housing associations across 119 local authority areas, to build a further 5,100 affordable homes.

£35m will be spent to help regenerate almost 700 homes across 11 urban areas through the Housing Market Renewal Pathfinders programme.

This announcement followed Prime Minister Gordon Brown’s commitment to invest an extra £1.5bn towards building a total of 110,000 new affordable homes over the next two years.

The Minister also revealed that there have been more than 300 bids from developers for the government’s £1bn Kickstart fund to unlock stalled private sector developments.

The Minister said: ‘Building homes, creating jobs and lifting communities out of deprivation is a top priority for us in government. I’m determined to pull out all the stops to see new homes built to meet our need for more housing in Britain.

‘At a time when private house building has declined dramatically during the recession, government investment and action means more affordable homes are now being built more quickly and we are helping to keep the construction industry going.

‘In fact we’ve doubled the investment in the homes we’re building through our affordable housing programme compared to this time last year.

‘The steps I’m announcing put real momentum behind the Prime Minister’s housing pledge and I want to see work start on sites across the country within months.’

Home Information Packs

“Stunting market recovery” 

The Home Information Pack (HIP) is
being blamed for “stunting market recovery” according to estate agents. The National Association of Estate Agents (NAEA) in a recent survey reported that of its members, ten per cent of agents believed the number of sellers would double if HIPs were suspended.

The NAEA survey also discovered a fifth of all agents believed the number of sellers would increase by 20 to 25 per cent, with a huge 91 per cent “adamant that customers paid little or no attention to the controversial packs anyway”.

The Royal Institute of Chartered Surveyors (RICS) found stock of homes was down, despite buyer interest picking up. RICS have also
noted “anecdotal evidence” suggested HIPs were decreasing the number of buyers
coming forward.
Peter Bolton King, chief executive of the NAEA, said: “The housing market has seen a number of positive signs in 2009, particularly an increased demand for property and more sales being completed.

“However this will be unsustainable without a steady supply of housing. HIPs are controversial and in the NAEA’s opinion, relatively useless. That is bad enough, but these figures suggest that professional agents believe that they are actively harming the market.”

In April the laws on HIPs were changed, so they were required to be completed before a home was advertised for sale. They also must now include additional information, including a Property Information Questionnaire (PIQ), and can cost the seller up to £400 to complete.

The NAEA figures suggest that in April, the average estate agent had 67 properties available to sell, compared with 84 in April 2008 and 100 in December.

“The figures are significant because of fears that housing market recovery is being stunted because increased demand for property among buyers is not being matched by a supply of houses for sale.

“The government should look at scrapping these packs, at the very least until the market has recovered. At that stage they should be reviewed. The NAEA would be happy to offer its professional opinion as to the best way forward,” Mr Bolton King added.