Brickonomics

The latest Government house building numbers strongly suggest that a shade more than 100,000 homes will be built in England in 2009.

This would represent a 40% drop on the peak year of 2007 and make 2009 a record peacetime low.

There are hints of hope in the figures with the starts figures rising. But if we look at the 12-monthly number we see that the accumulated starts over the past year are low, which does not bode well for an upturn in completions. Still, it is a start in the right direction.

Continue reading "House building looks set for growth in 2010" »

Inflation is now on the way up. That was to be expected. As Mervyn King, Governor of the Bank of England, keeps reminding us, we should expect inflation to be very volatile for some while.

But, is it me or do the forecasts for inflation reaching a mini-peak at about 3% in the early part of next year seem to be a little timid?

The reason I am a bit unsettled is that if expectations for inflation prove to be significantly on the lower side, this may lead to an upward pressure on mortgage rates and lending rates in general.

Continue reading "Are expectations of inflation too low?" »

For those interested in what will happen when the stamp duty holiday comes to an end on December 31, the surveyors' body RICS has done a little bit of research among its members.

Basically, the results seem to suggest that by and large the effect on property transactions will be muted and will not cause a swell in the number of people looking to buy or sell their homes in the run up to 2010.

And when the tax threshold rises in the New Year estate agents in most regions don't think there will be a fall in transactions.

There is however quite a bit of regional variation in the views, which is not surprising given the spread in house prices regionally. London and the South East, for instance, unsurprisingly expect the least effect.

It's the run up to Christmas and we're in a recession - well if not technically, we're definitely suffering from the recession - so don't be surprised to see redundancies on the rise and asking prices for homes on the decline. It is the nature of things.

And in this regard we have not been let down by the price data research from the property websites Rightmove and FindaProperty. Both show the recent rally in asking prices reversing this month.

No doubt there will be many reading this as a sign of the start of the double dip in house prices. Well a double dip in the housing market is highly likely, but whether the drop in these indexes represents the crack from the starting gun or not is debateable.

Continue reading "Christmas sales come to the housing market" »

A further 38,000 construction workers were made redundant in the three months to September according to the latest Government labour market figures.

This raises the total of employees shed over the previous 12 months to 177,000.

Meanwhile the figures also show that the chances of those being made redundant finding a new job within construction have dropped even further. Recorded vacancies fell to an average of just 8,000 over the three months to October.

Also the redundancy figures apply to just a section of those who earn a living from construction, as large numbers are self-employed in what is a highly-casualised industry. This can cloud the true extent of the damage being done to the construction workforce.

But the graphs clearly illustrate the plight of those employed in construction. And next month the statisticians will make their latest estimate of how many jobs there are within the industry.

Continue reading "Construction continues to shed workers at an alarming pace" »

First-time buyers are increasingly becoming trapped in their first-time homes and unable to move on to homes that better suit their needs.

That at least is the implication of some figures that caught my eye recently when I was looking though some data produced by the Council of Mortgage Lenders.

Consider this: the median income of a household taking out a mortgage to move is £47,328, or it was in August this year. In 2000 that figure would have been £29,000. This represents a 60% increase in the median earnings of home movers against a 33% increase in median earnings across the UK as a whole.

Graph 1 shows the rise in the median household income of first-time buyers taking out mortgages and of house movers along with the median and mean incomes across the UK as a whole.

Graph 2 shows the ratio of the median household income of both first-time buyers and house movers to the UK median income.

It would seem that the threshold of earnings to be able to move is rising. This in turn strongly suggests that the proportion of first-time buyers able to trade up is diminishing - and probably diminishing fast.

And these figures do not take account of the fact that cash buyers have become an increasingly large part of the home-mover market.

If the figures mean what I strongly suspect they do then current policy appears to be giving large numbers of desperate first-time homebuyers a leg up into a housing trap.

What is more, as the graphs suggest, this is a problem that seems to predate the credit crunch, so is not simply about access to finance.

Continue reading "The stagnant housing market: More a problem of first-time movers than first-time buyers" »

All the gauges appear to be reading "set fair" in the housing market, so why the long faces among those in the know?

The latest RICS housing market survey on the face of it provides every reason to suspect that better times lie ahead. This follows a raft of housing indexes showing house prices rising steadily for several months.

The RICS survey has for three months now seen more surveyors reporting rising prices than reporting prices falling and the majority has grown.

The survey shows that as well as rising prices there are increasing numbers of new instructions, sales are increasing, new buyer inquiries are rising and surveyors are increasingly confident of that prices will continue to increase.

But why, with everything appearing so rosy, is there so much concern among the experts that I talk to about the fragility of the market?

Continue reading "Has the housing mini-boom run out of puff?" »

The RICS construction survey for the third quarter of 2009 found confidence over increased workloads returning to the industry for the first time since 2008 Q1.

This was despite an overall fall in workload across the industry as a whole and the fact that things would have been worse but for a positive showing from publicly financed construction.

So are the surveyors right and we are poised to rebound from recession over the coming year?

Certainly it is encouraging to see optimism alive and kicking in the construction industry. But the seeming disparity between optimism and reality does throw up some issues, which relate to this survey and others of its nature such as that from the buyers' body CIPS.

It is not uncommon for questions on expectations of workload to overstate the likely future. (Although I suspect if you looked at the surveys of farmers or civil engineering contractors the reverse may be true. I recall in the 1980s the surveys of the then civils body FCEC consistently painting an over gloomy picture of the future.)

But on this point, let's look at the survey data from RICS in the period up to the start of the construction recession in early 2008. The graphs below are taken from the first quarter 2008 survey.

So what do they tell us?

Continue reading "Optimism alive and kicking in construction" »

For those poring over the latest new orders figures released today to find guidance on the future of construction activity I suspect there is something for the optimists, but rather more for the pessimists.

It must be said that trying to discern sensible insight from examining the orders figures month by month is probably as fruitful as peering and prodding hourly at the scab on a grazed knee to see how it's healing. You more or less know how long it will take to heal - a few days - but that doesn't stop you looking.

Anyway the latest fare came out from the ONS today and it shows construction orders continuing on the predictable decline downward at a pretty predictable rate.

Continue reading "Orders figures continue to point to a rougher road ahead" »

The latest round of trade survey data points to an ugly acceleration in the rate of collapse of workloads.

Persistent sightings of green shoots over the late spring and summer now look to have been little more than a mirage.

Continue reading "Growing evidence of double dip collapse for construction" »