Shoots in the dark
Inside Housing has its nose to the ground again this month, hunting for signs of green shoots in housing developments across the UK. Home registrations nudge up but there are financial clouds on the horizon
When Inside Housing began tracking four housing developments around the UK in June, the modern house building industry was emerging from its lowest ever ebb.
‘The fourth quarter 2008 and first quarter 2009 were undoubtedly the low points in terms of production,’ says Richard Tamayo, commercial director of the National House Building Council. ‘There doesn’t seem to be anything like it since the Second World War.’
Inside Housing’s June snapshot revealed some evidence of development green shoots, tallying with NHBC figures which showed new home registrations increased by 5,000 units to 21,000 in the second quarter.
While that represents a 28 per cent drop on output during the same period last year, Mr Tamayo predicts the third quarter will see further increases. ‘I wouldn’t be surprised to see something like 24,000 to 26,000 units for the quarter,’ he says.
The national trend plays out in our second snapshot of the developments detailed here, which are progressing to plan. But challenges remain. Mortgage availability is failing to match demand, and there are signs that supply chains could struggle to cope if development rates continue to increase nationally. Greatest concern is reserved for the future of social and affordable development. Amid the uncertainty posed by next year’s general election, serious questions are being asked about funding for new homes. As Mr Tamayo says: ‘We may be entering a subsidy environment which is slightly less benevolent.’
Abbots Cross, Newtonabbey, Northern Ireland
- Developer P J Treacy & Sons for Helm Housing
- Cost £1.1 million (95 per cent grant from the Northern Ireland Department for Social Development)
- Total homes 14
- Type of homes Supported housing for people with learning disabilities . A mix of shared and self-contained sheltered housing, plus staff accommodation
- Tenure split All social rent
- Start date March 2009
- Completion date March 2010
- Homes completed None
- Average selling price n/a
- Homes sold/reserved/footfall n/a
Voice on the ground Michael Foster, development director at Helm Housing, says: ‘Construction is now ahead of programme by about six weeks. On this single project we have not seen supply chain pressure due to increased volume.
‘Supply chain pressure has been linked to the economic situation and ensuring prompt payment clauses in contracts are actually implemented by main contractors. Continuing vigilance on site progress is essential.
‘The position on funding in Northern Ireland has not changed [since June]. This association is loathe to commit to [future] construction of affordable housing at this time given the uncertainty which remains for funding both the capital programme and likely availability of mortgages for prospective purchasers. This position is being kept under review.’
Redgrove School, Stoke Prior, Worcestershire
- Developer Bullock Construction for BDHT
- Cost £3.3 million (£927,000 grant from the HCA and Bromsgrove Council)
- Total homes 19
- Type of homes Two four-bed houses, 13 three-bed houses, four two-bed houses
- Tenure split 11 social rent, eight shared ownership
- Start date July 2008
- Completion date September 2009
- Homes completed Practical completion due end August 2009
- Average selling price £152,250
- Homes sold None (marketing just begun)
- Homes reserved None (marketing just begun)
- Footfall/requests for information 72, up from 5 in June
Voice on the ground Mike Brown, chief executive of BDHT, says: ‘The contractors have been excellent and everything is proceeding to programme. We have noticed increased delivery times for certain items which would indicate demand [on the supply chain] is growing, but it is nothing that has presented any problems in terms of this development.
‘Interest has been massive. This is a very popular scheme in a popular location. In general terms, shared equity sales are being affected by the availability of mortgages for this type of tenure but determined purchasers are finding their way through.
‘The rented element of this scheme will be subject to local lettings criteria as it is a village location and we are being inundated with eligible applications.
‘The government’s recent £1.5 billion [housing funding] announcement was critical to maintaining confidence in the affordable housing sector as we were beginning to see grants drying up from the Homes and Communities Agency.
‘To be frank we think there is a degree of uncertainty about the HCA’s priorities and the degree to which grant funding will be available in the next 12-24 months.’
The Zone, Bristol (phase four)
- Developer Barratt Homes
- Cost £60 million (gross development value)
- Total homes 153 (407 in total, five-phase development)
- Type of homes 21 studios, 62 one-bed apartments, 63 two-bed apartments, seven three-bed apartments
- Tenure split All leasehold
- Start date December 2007
- Completion date December 2009
- Homes completed 107, up from 100 in June
- Average selling price £131,000 (down 3 per cent on June, due to more sales of one-bed than two-bed homes)
- Homes sold 117, from 108 in June
- Homes reserved 119, from 5 in June
- Footfall Up to 12 a week, from 4 in June
Voices on the ground Site manager Bob Burgess says: ‘The pace of construction has remained consistent, and as per Barratt targets. We are still expecting to complete around 80 units this financial year.
Sales manager Richard Lawson says: ‘Interest has certainly risen but [lack of] mortgage availability has not helped. We have seen an increase in footfall and reservations and we do expect this rise to continue. [Since June] the market has certainly become more positive and the perception is that things are on the up which has to be good news.’
Wyncliffe Gardens, Pentwyn, Cardiff
- Cost £17 million (gross development value)
- Total homes 256
- Type of homes One and two-bed apartments, three and four-bed homes
- Tenure split Leasehold and freehold
- Start date July 2006
- Completion date 2011
- Homes completed 158, up from 155 in June
- Average selling price £137,030 (down 35 per cent on June due to more sales of apartments)
- Homes sold 158, from 155 in June
- Homes reserved 30, from 21 in June
- Footfall 93 per month (150 to June)
Voice on the ground Sharon Robinson, sales director at Persimmon Homes East Wales, says: ‘Business has levelled out now and our construction has picked up again from 21 units in the first half of the year to 34 to 35 in the second half. We are predicting the same in the first half of next year. Confidence has changed and customers are more ready to commit than they were.
‘Footfall may be down but you would expect that in the summer. Selling prices have stabilised and we are not cutting our prices like we were six months ago. From May we started offering a scheme where we furnished four-bed properties that we were struggling to shift and have had 10 sales as a result. Customers now are much more streetwise so we just need to be honest and that’s what we promote.’
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