Update – October 2016

“It’s time to get building”

Sajid Javid, Communities Secretary, speaking at the Conservative Conference last week, has confirmed that a Housing White Paper will be published by the end of the year. It will include significant new measures to speed up the supply of new housing.  He also reiterated the government’s ambition to build “a million new homes by 2020”.

The Secretary of State acknowledged that this and previous Governments do not have good track records. He said: “This country has not built enough homes. We’ve got to be honest about it. In the last year of full records, we managed to deliver more than 170,000 additional properties across England. We need to do much better.

“Everyone agrees we need to build more homes. But too many of us object to them being built next to us. We’ve got to change that attitude.”

Javid went on to talk about the planning system: “Local leaders must be prepared to make difficult calls, even if they’re unpopular. And so must MPs and councillors. Of course, there are valid reasons to oppose some planning applications. But all of us have a duty to think about the long-term consequences of every decision we make.

“As elected representatives, we are here to take the right decisions – not the easy ones. Ultimately, we have a responsibility to build more houses.”

In his speech at Conference, Javid highlighted three immediate initiatives:

• the launch of a £3bn Home Building Fund, which will provide loans to SME builders, custom builders, offsite construction and essential infrastructure,
• using public land and £2bn of investment to encourage new developers and different models of construction to build at up to double the rate. This ‘accelerated construction’ approach could deliver up to 15,000 homes in this Parliament on surplus public sector land.
• a package of measures to encourage urban regeneration and to build on brownfield land. This would involve “delivering high quality housing for families, bringing new energy to our high streets and town centres” and would result in “abandoned shopping centres being transformed into new communities and increasing density of housing around stations to build homes”.

He touched on affordable housing stating that increasing the stock was a moral imperative.

Read the press release about the Housing Fund.

Read Sajid Javid’s speech.

Local plans to meet local needs

Speaking at the Conservative Party Conference last week, housing and planning minister, Gavin Barwell, re-iterated his commitment to the local plan process.   He said: “My main role is to insist that every council in the country does not try to duck the hard decision of meeting the need in their area.

“How they do it is up to them, but I’m not going to let them get away with ducking it.”

This will be further motivation to the numerous local authorities around the country currently struggling through the local plan process trying to adhere to the deadline give by CLG. We have been hearing from various local authorities which have had contact with CLG recently that there will be no relaxation of the timetable or deadline for producing and submitting local plans.

Questions have also been asked at several council meetings about relaxing the OAN numbers in light of Brexit and the likely subsequent reduction in immigration numbers. It has been pointed out, however, that the ONS population projections, upon which OAN figures are based, already have built-in a reduction in immigration up until 2020. Furthermore, ONS is currently reviewing its population projections and already we are seeing OAN figures increasing in some areas.

 Strongest growth in urban house prices for two years

The Knight Frank Global Residential Cities Index has revealed 5.5% growth, the strongest annual rate of growth for two years. The index tracks 150 cities across the world with 114 recording positive annual price growth in the year to June and, of these, 31 cities saw price growth exceed double digits.

The figures revealed some surprising results with four of the top 10 European performing cities being in the UK: Bristol, London, Nottingham and Birmingham.

And some not so surprising results with Chinese cities occupying six of the top 10 rankings for annual price growth, and Moscow occupying the bottom ranking with prices falling 11% in the year to June.

The Chinese city of Shenzhen continues to lead the rankings but annual price growth has slowed from 63% to 47% in the last three months.

Download the PDF for further information.

Government reliance on the London market

In its Autumn London Residential Review, Knight Frank has highlighted just how much stamp duty income the Government receives from the capital.  London’s contribution to total stamp duty revenues rose to 44.6% in the year to March 2016 from 41.5% a year earlier. In total, 11% of all stamp duty revenue in England and Wales is collected from just two London boroughs: Kensington & Chelsea and Westminster.

However, Knight Frank has uncovered signs the stamp duty changes introduced by George Osborne are disrupting the natural cycle of the London property market. Since 1995, rising transactions in central London have typically been followed by declines as activity and house price growth spreads to outer boroughs. Following a two-to-three year period, this movement has typically reversed as central London prices become more attractive relative to outer London. However, that cycle now seems to be broken. There are few signs of transactions increasing in central London following a broad decline in volumes that began several years ago. If the pattern persists, the risk is that demand and property prices in outer boroughs will become further inflated and more susceptible to future price instability.

It is clear that there is growing fiscal reliance on areas where transactions are shrinking at the steepest rate.

To view Knight Frank’s London Review, please click here.

Key findings:

• Higher stamp duty means average five-year transaction declines exceed -5% in boroughs including Westminster, Kensington & Chelsea and Camden
• Our latest analysis shows the government increasingly relies on London for its stamp duty revenue, a contribution that now exceeds £6 billion a year.
• The importance of the prime London housing market in particular is underlined by the fact 11% of all stamp duty revenue in England and Wales is collected in the two London boroughs of Kensington & Chelsea and Westminster.

The report also contains commentary and research on:

• Price sensitivity post-Brexit
• Insight into the increasing pressure on the sub-£2m market
• Prime outer London comment
• Rental and investment market focus