A successful partnership has many benefits

The Autumn Statement has been and gone and from a housing perspective the detail was already known about the creation of funds to invest in housing. So all good on that front.

But under the skin of it all is a housing market that needs stimulating and although the measures announced in the budget provide a certain level of stimuli there is a great need, to me, for more partnerships to be formed to really help deliver longer term housing growth. Why partnerships? Well some schemes that need to be and can be delivered are long term and usually involved the public sector who simply do not have the resource to deliver, what they do have though is land and an ability to work with the community to deliver.

The Government's Housing and Planning Bill, following on from the National Planning and Policy

Framework reflects “a commitment and strategy to deliver a step change in housing delivery in building new homes in the UK and alleviating the housing crisis”. So what can prevent this occurring, well quite frankly a lack of resource – particularly housing associations and local authorities – which are the key to unlocking significantly higher housing growth.

So how could it work – well you take (a) private housebuilder with labour and materials and (b) a local authority with land in areas needing regenerating = (c) a regenerated city with more affordable housing – see, simple as “a + b = c”. But you can’t simply create a partnership – you need crate something that will survive and thrive.

The key to success for a partnership is having shared objectives and working to achieve these objectives and that means:

·        Leadership is needed by all parties involved to deliver the vision;

·        A shared vision is needed to engage the parties involved, bring in the community together and above all it supports each other’s values, this in itself creates a long-term, robust plan. Imagine a partnership that has the goal of regenerating a local area, this could take decades therefore needs the early vision’

·        Due to the timeframe of delivery then needs to be an embracement of the bad times as over the life there will be the cycle of the market. Hold the nerve and plan this into the budget, or even better seek to take advantage of the cycle; and

·        Constant communication and transparency in those communications. Private and public sectors have differing objectives and therefore there needs to be an acceptance that the public sector may be more risk adverse –by keeping good transparent dialogue will help the partnership bond.

The outcome to a true partnership can be something unique. I have visited many cities in my life and you always remember certain parts of each of them – to me seeing the regeneration of my home city, Sheffield, brings feelings of hope and prosperity but also patience, “Rome wasn’t built in a day” springs to mind! The outcome is something the public and private sector can look back on and feel proud to have achieved but also the community look forward to the possibilities it will help them achieve.

We need to reflect that “real assets” impact us all. They are where we work, live, play and learn and therefore each of us has a desire to create the best space to achieve this. Bringing the best of both worlds together can really help unlock the potential of some of our regional cities and create spaces that attract the best businesses’ and the best people.

 

Enjoy the rest of the week and a always any comments on the blog are greatly received.

 

Thanks

 

Lee

 

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House prices still on the up

The average house price in October rose slightly, according to Halifax, but does this simply hide a wider issue of a growing supply shortage across simply everywhere. The Government has simply accepted delivering 1,000,000 homes by 202 will fail – but who actually believed they would – and I really fail to see how a £18m fund will help boost housebuilding, but I’ll give Gavin Barwell the benefit of the doubt.

The simple fact is that it was a surprise for the house price index to grow in October and counteracted the slowdown which has left construction at its lowest levels for a number of years. The rise was only 1.4% but an improvement on the 0.3% seen in September and meaning in the quarter ended it was a very healthy 5.2%.

A recent survey by RICS, the Residential Market Survey, is finding that people cannot find a house – the supply has become so sparse with what is available simply being unaffordable and to add to the agenda, it is expected Americans may seek to relocate to London following Trump’s victory.

So the answer to help – well the sector is asking for the Green Belt to be opened up for development, a fund of £18m fund to speed up house building on larger sites which in turn should provide thousands of homes. In fact the CBI has outlined some recommendations (all of which are relatively sensible). The £18m fund can be applied for to help planning issues that can cause delay but is the amount really enough.

In a world that is every changing, one thing seems to remain static and that is the plans to address housing. Over the last few months I have read report after report which outlines 1,000s of homes that are coming to market yet they all seem to stall for one reason or another (so maybe the fund will help?) but this alone will simply not resolve anything. The key is for LA’s and HA’s to really get building again and therefore it was reassuring to see plans for a Northern HA to do just that – let’s hope this continues more broadly.

House price growth to flatline in the short term

The weather is certainly changing. Last week, locally we saw the first snow and the frosts are coming in thick and fast. It certainly feels like a time to be pulling down the blinds, getting out the blankets and wishing for warmer climates. The same could be said about house prices.   The average UK house price remained unchanged in October, not too unsurprising given it is expected that house price growth across the board will flatline across the next two years. The Nationwide published their latest house price index and simply it showed that average price was £205,904 compared to £206,015 the month before – a minor slip but it’s negligible, and still approximating to six times average annual earnings. Not to spread any fear but the last time the prices/earnings ratio was this high was around March 2008 (and we all remember what happened next!) as house prices have grown by 20% versus a wage growth figure of 6% - feeling squeezed?   Despite this there is a reassurance that house price growth will resume in due course (rather than crash). The predictions for example of JLL are 0.5% in 2017, 1% in 2018 and then up to 4% in 2020 compared to Savills of 13% over the next five years. Hard to imagine a further 13% house price growth (though will do wonders for my retirement fund!). The interesting point is Savills predict rental will increase faster than house price growth – good news for the vast waves of new properties out there for rent, but also clearly is showing the shift towards Generation Rent. In fact rents are forecast to increase by 19% versus 13% for house prices – though this is clearly a challenge for anyone looking to enter the housing market.   There is a shining hope in the form of offsite manufacturing which could put a huge dent into the housing crisis, or at least at the affordable part of the crisis. The construction resurgence is showed through NHBC revealing new homes registered is at its best levels since 2007 with 18% being affordable homes. With offsite shaking off its poor reputation the Government has given it a boost with a strategy change by embracing pre-packed homes. The aim is to target younger buyers with more details expected in next months White Paper (or maybe even as part of Autumn Statement 2016).   The benefits of pre-packed or “modular” homes are clear – quicker to build and it’s cheaper. The certainty of housing market over the next few years is hazy but one thing is true, housing is needed and therefore is a need to innovate the sector to keep Britain building and housed.

 

 

 

 

Heathrow and house prices - the key link

On a week that commences with the PwC Real Estate Conference you can’t help look and think about the environment around you. I start this blog sat in London Heathrow airport waiting for a 6:20pm flight. Seeing evidence of infrastructure like Terminal 5 is inspiring to know that in the UK it does still happen, but does it happen enough? The approval of a third runway at Heathrow is a bit like marmite – you ever agree or you don’t. To me it’s key the Government have made a decision. The best way forward to actually delivering in a timely manner but also not to completely ignore other airports for growth and let us not forget the Northern Powerhouse. My experience at Manchester Airport was fair more smoother and friendlier than Heathrow!

The construction of the new runway at Heathrow will naturally be a boost for construction but also could have an adverse impact on house prices in the area – could this be a sign of things to come in the Middlesex area with increased noise – and let’s be honest a 6.5 hour night time ban will not exactly be a solution. The optimum sleep for an adult is between 7 and 8 hours so this 6.5 hour ban will not benefit anyway other than those who sleep specifically during those periods.

Although it is nice for once not to hear the soaring prices of London residential space, I do wonder at what point the blip in London prices will ripple out to the regions. The marching ever upwards of UK house prices can be argued to be creating wealth in the North but also taking it away from others who struggle to get onto the ladder. The Centre for Economics and Business Research has forecast a fall in London property prices by 5.6% in 2017 which will therefore mean growth for the UK will only be 2.6%, compared to 6.9% for 2016. 

So what does this show us – well it doesn’t show us that Brexit fears were right or wrong. It shows us that London was overheated and already heading to a cooling off period. For the rest of the UK, yes growth is slowing but generally the housing market is relatively unscathed. No surprise right! The housing crisis is not one crisis but many mini-crisis across different regions and demographics. The good sign is that the British Bankers’ Association revealed September say mortgage lending increasing (£12bn for the month – though 2% lower than September 2015) and house buyer demand, according to the National Association of Estate Agents, rose 16% in September (38,252) compared to August. People back from holidays or a general move in the right direction – either way we’ll take it.

In a circular format we see that a decision not related to housing can be linked to housing. It is an issue that needs to be explored further by the Government. They continue to promise a detailed strategy on housebuilding and this seems to be drip fed in varying strategies for different sectors – but doesn’t seem to be tackling the “affordability”. The Local Government Association is asking that councils in England be freed from restrictions on the ability to fund new home building. I think it is obvious that this will certainly aid building more homes, just look back in time – public sector delivered the houses not private.

If you any questions or would like to discuss the above please do let me know

Many thanks
Lee