Housing Transaction Numbers Sliding

Over the past three years, the number of housing transactions has dropped significantly. 

According to the Q3 2019 edition of the Conveyancing Market Tracker from Search Acumen, there have been over 100,000 fewer transactions in the first nine months of 2019 compared to the equivalent period in 2016.

Unsurprisingly, the political and economic uncertainty during that period is front and centre when looking for causation. 

Andy Sommerville, Director of Search Acumen, said: “Every passing quarter of 2019 has brought more political headwinds to the property market due to Brexit related uncertainty. One hundred thousand fewer transactions so far this year compared to 2016 is an indicator of the ‘Brexit effect’ on an already cooling property market.

The report also cites a shift towards the largest conveyancers with a number of smaller firms no longer operating. In fact, despite overall declining transaction levels, conveyancing volumes are up by nearly 8% quarterly from 228,994 in Q2 to 246,816 in Q3, with a leap of more than 5,500 transactions – more than 10% – for the top ten biggest conveyancers.

Who do you believe? Election 2019

The conservatives are pledging to deliver 1 million homes in 5 years. A quick online search of ONS figures reveals the last time the UK built 200,000 homes in a year was back in the late eighties. And we have built around 880,000 homes in the past five years. 

So how do the conservatives propose the uplift in numbers?: through an overhaul of the planning system to encourage the private sector to increase production.

For Labour, the focus is on affordability. They are promising to build 100,000 council homes a year, which will be directly controlled by local authorities. In addition, they have also pledged 50,000 affordable home to buy through Housing Associations with affordability determined by local incomes. This will be financed by using half of its Social Transformation Fund

Finally, the Liberal Democrats are planning to build 300,000 homes per year with one-third of those being ‘social homes’

Bovis buys Galliford Try Partnerships

Bovis has agreed to buy the housing arm of Galliford Try, currently branded as Linden Homes and Galliford Try Partnerships, for a little over £1billion.

The acquisition will be funded by a combination of shares and cash giving existing GT shareholders a stake in the newly formed business.

The synergies for Bovis are threefold. Firstly, the new business will deliver around 12,000 new homes a year which puts it straight into the top 5 house builders in the UK. Secondly, it take Bovis firmly into the partnerships market offering the business greater diversity. Finally, the established locations of GT Partnerships in the north of England give Bovis fuller geographical coverage.

In his statement, Bovis CEO, Greg Fitzgerald, said: “I am very focused on successfully integrating these businesses in early 2020 with strong management across all business areas, and on delivering the clear benefits from the combination including at least £35 million of synergies as quickly as possible.”

Are we having a pre Brexit wobble?

The latest NHBC registration figures would suggest so.

Steve Wood, The NHBC CEO, said “The slowdown in overall registrations in August seems to be partly due to prevailing uncertainties in this pre-Brexit period. Nonetheless, it is encouraging to see growth coming through in the affordable and rental sector.”

The number of new homes to be built for those in the affordable and rental sector in the UK continues to rise significantly but these gains have failed to offset the decline in the private sector registrations.

3,875 new homes were registered in the affordable and rental sector in August, a 17% increase year-on-year (3,252 in 2018), whilst home registrations in the private sector fell 20% to 8,420 (10,460 in 2018).

With the Brexit deadline looming and the prospect of a general election before the end of the year housebuilders will have to work hard to keep their sales rates up in the face of a potential “wait and see” mindset from customers.

Bovis and Galliford Try Merger

It’s not the first time this has been attempted but an increased offer from Bovis for the Linden Homes/GT Partnerships part of the Galliford Try group seems to have got all parties excited. 

There are certainly synergies. 

Firstly, Bovis doesn’t currently have a regional office north of Stafford. The merger would give them an instant presence in the North West, Yorkshire and the North East, all key regional house building markets.

It would also take Bovis’ fledgling partnerships business straight into the premier league on the back of GT Partnerships regeneration market share.

And finally, the divestment of their housing arm would leave Galliford Try as a well-financed stand-alone contractor able to focus on its core business.

The two businesses have agreed terms and are seeking shareholder approval, likely to take around three months. Should the deal proceed the newly formed company would become the fourth largest housebuilder in the UK.

Have you missed the Barratt helicopter?

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House builders have largely shunned TV advertising since the iconic Barratt helicopter advert of the 1970s. (Yes it really was 40 years ago and if you fancy a minute of nostalgia click here)

However, that’s about to change with Redrow embarking on a TV campaign to challenge the widely held perception that new builds are small, uniform and soulless.

I’ll let Redrow take you through the myth debunking as they aim to differentiate their product both from other house builders and the second-hand market.

If the campaign proves to be successful it may well bring buyers to the wider new build market who may have only have been focused on second-hand homes. Likewise, it may also pave the way for other builders to take the plunge on TV advertising. It’s fair to say that the medium has changed significantly since the Barratt helicopter.

Have you had a call about a CEO position?

If so, it may have been the top seat within Gleeson’s boardroom.

After 7 years as MJ Gleeson’s CEO, Jolyon Harrison, has stepped down with immediate effect after a disagreement over remuneration.

Gleeson made the following statement: “Following extensive discussions with Mr Harrison regarding his remuneration and succession planning, the board concluded that it was not possible to find a mutually acceptable basis for Mr Harrison to continue as chief executive officer,”

James Thomson, former CEO of regeneration rival, Keepmoat, has been put in post as interim CEO whilst the business begins it’s search for a permanent successor.

The business sought to reassure investors by restating that forthcoming results will still indicate strong growth and be in line with expectations.

How fast did house prices grow in the past 12 months?

The quick answer is: depends on who you ask?

Halifax released figures claiming a 5.2% average price increase for the 12 months to May of this year. This looks somewhat generous given that Nationwide put the figure at just 0.6%. The ONS put the figure at a slightly more optimistic 1.4%.

When questioned about the discrepancy the MD of Halifax, Russell Galley, claimed that their figure was flattered by weak growth in the previous period. And then resorted to covering all eventualities with the following statement: “Looking ahead, we expect the current trend of stability based on high employment and low-interest rates to persist over the coming months, though clearly any downturn in the wider economy would be keenly felt in the housing market”.