Blanchard Consultancy – the independent construction consultant

The zero-carbon homes of the future should self-generate the vast majority of the energy they use, but a small amount of near-site or off-site renewable generation will also be allowed, a report says today.

The UK Green Building Council's (GBC) new report, The Definition of Zero Carbon, was thrashed out by a range of stakeholders trying to work out a blueprint for the provision of zero-carbon homes from 2016 mandated by the government.

The GBC's zero-carbon task force was chaired by Mark Clare of Barratt Developments. The company will this week unveil what it claims is the country's first zero-carbon house from a volume housebuilder.

Environmentalists and construction firms have been debating how to define zero carbon, with greens wanting each house to be zero carbon while the housebuilders argue that could be too expensive or impracticable. They want the flexibility to invest in offshore wind farms, for instance, as part of their commitment to renewable energy on their developments.

The GBC report rules that out, but does say some district heating schemes could be allowed or housebuilders could, in certain circumstances, pay into a community energy pot to fund local projects.

GBC chief executive Paul King said: "The government's level of ambition is spot on and should be supported 100%. This is not about dumbing down or abandoning the concept of zero carbon. This is about ensuring the same high level of carbon savings, but allowing developers more flexibility."

He stressed that near-site schemes could be approved but only if there was proof that the project was a genuine addition to the country's renewable-energy provision, and that the energy would be used to power that specific development. Failing that, the developer could pay into a community fund that would ensure equal or greater net carbon savings through new installations.

"The price of paying into the fund should be set at a margin above the cost of community-scale solutions so as to clearly incentivise the installation of on-site or local measures first," says the report.

The report, which will feed into the government's consultation on the definition of zero-carbon homes this year, is likely to be approved as it has been agreed by a range of different interests. Clare said: "The value of this report is reflected in the high degree of consensus reached by many different stakeholders."

WWF, the charity that has been a key driver behind the government's zero-carbon homes initiative, said the 2016 target was "eminently achievable".

Simon McWhirter, WWF's homes campaign manager, said: "WWF is optimistic that the findings from the Task Group will dispel confusion over the definition of zero carbon, investing more developers with the confidence to build to the very highest levels of sustainability. We hope this will help deliver practical zero-carbon homes well ahead of the 2016 deadlines."

Zero-carbon homes will be so well insulated they will require very little heating. They would have appliances consuming minimum electricity to be provided by installations such as solar photovoltaic panels or combined heat and power (CHP) plants. The report's definitions will allow for a single CHP plant to power several adjacent homes.

Original article here.

Labels: Barratt Developments, Green housing, UK GBC, WWF, zero carbon housing

More people want house prices to fall than to rise, BBC research has found.

That is the surprise finding of the first poll to test the assumption that house price falls are unpopular and therefore politically damaging.

Barely a fifth of people want house prices to rise - fewer than the number of people who want them to fall.

The poll of 1,005 people, commissioned by the BBC, found that only 22% said they wanted prices to go up while 28% said they wanted house prices to fall.

The poll, carried out by ICM, canvassed people over a three-day period from 25 to 27 April.

'Crashproof'

Nearly half of the people who responded, or 46%, said they wanted them to stay the same. The findings cast doubt on whether the political and economic damage done by falling prices is as serious as has been feared.

The poll was commissioned after makers of the BBC2 TV series The Truth About Property came across a surprisingly large number of people who wanted house prices to drop.

The first part of the series investigates the extent to which Britain's homeowners are "crashproof" - meaning they could withstand or even benefit from price falls.

What people in Cambridge think about house prices
Price falls bring economic benefits not just to first-time buyers but to any homeowner who wants to trade up to a larger or more valuable property.

The price of the place they are selling may fall. But, all else being equal, the more valuable property they want to buy will fall by a larger amount - meaning they have to borrow less to "climb" the property ladder.

Confidence knocked?

Economists are concerned that if prices fall too quickly it may knock consumer confidence, already at its lowest for 15 years, leading to reduced spending that could worsen the current economic slowdown.

But another finding for the programme questions whether it is house price falls that have damaged consumer confidence - as opposed to other factors such as food, fuel and mortgage payments.

Respondents were asked if a fall in house prices of more than 10% would make them more likely to cut back on household spending such as clothes, leisure and groceries.

More than 60% of people said it would either make no difference or would make them likely to spend more.

Only a minority - 38% - said it would make them more likely to cut back.

Nearly a third of homeowners have no mortgage on their homes - meaning no risk of negative equity.

And the programme reveals to what extent house prices would have to fall to put the average borrower in negative equity.

The Truth About Property is broadcast on Monday, 12 May and Tuesday, 13 May at 2000 on BBC Two.

For more info see the original BBC article.

Labels: Andrew Verity, House market, House prices survey, ICM, The Truth about Property

The Truth about Property is back for a second series and aims to make sense of the housing market turmoil. In this series presenters Andrew Verity and Jenny Scott travel around the UK to hear how households are coping.

Are you crash proof?

The ubiquitous credit crunch has led to a rough ride for home owners in recent months, causing higher mortgage costs and in some cases, negative equity and repossession.

In the first programme Andrew and Jenny find out how homeowners would cope in the event of a major property crash.

Andrew meets the Sawbridge family in Sheffield who are struggling to pay the mortgage and keep a roof over their heads.

While Jenny meets a property investor who is sure there is money to be made even when times are hard.

A solid investment?

In the second programme Andrew and Jenny find out how much we all invest in our houses and ask, is property a solid investment?

Andrew travels from John O'Groats to Lands End meeting people who face property dilemmas.

These include Tina and Simon who are first-time buyers and have just bought a home in Newton Aycliffe. The trouble is, falling prices have turned their dream into a potential trap. Now Tina wishes they had not bought.

Andrew also meets those who have found a creative solution to tough investment decisions such as Robin and Nicky who have invested in eco features. They believe a greener home will be easier to sell. Until then, they will enjoy lower utility bills.

Meanwhile Jenny jet sets with the property players.

Andreas Panayiotou used to work in his mum's laundrette. He bought his first property on Chapel Market in London 14 years ago. Today he owns assets in excess of half a billion pounds.

Andreas predicted the housing market slump and sold property worth £700m at the market peak. How did he know when to sell? And how far does he think property will fall?

Jenny also visits one of the most exclusive places to live in the world. Here an air of status has put a premium on prices. But how solid is an investment that is built partly on aspiration?

The Truth about Property will be broadcast on BBC Two on Monday 12 and Tuesday 13 May at 2000 BST

More details at BBC Business news.

Labels: BBC, Construction, Housing market, The Truth about Property

E.ON, one of Britain's big six energy suppliers, is teaming up with the University of Nottingham to build a replica 1930s house which will be used to test technologies aimed at improving the energy performance of Britain's ageing housing stock.

The three-bedroomed semi-detached house, on the university's "Green Close", will replicate what the partners describe as "many of the ageing and energy inefficient domestic properties" in the UK.

The government has set a target for new houses to be zero carbon by 2016 but industry experts acknowledge big efforts will be needed to improve the energy performance of the existing housing stock.

"Homes are big contributors to the causes of climate change as they account for almost a third of the carbon dioxide emitted in the UK," said E.ON's head of research and development, Dave Clarke. "Even with the government's target for all homes to be zero carbon from 2016, we'll need to retro-fit low carbon measures to existing homes in order to significantly reduce our carbon emissions."

The house will use low-carbon technology to generate and manage energy within the house and will have an extension designed to make the maximum use of solar panels.

Students will live in the house which is one of six being built on the campus.

"It will be lived in. We want to show the real savings, to get real data, from real people," said Dr Mark Gillott, research and project manager for creative homes at the university.

Gillott said that more than 21m current homes - about 86% of the total - will still be in use in 2050.

"It's vitally important that we identify and research technologies that are aimed at reducing the energy consumption associated with existing homes," he said.

Original article from Guardian Business.

Labels: energy efficiency, EON, Green Close, Green housing, Nottingham University

So the sky did not fall in. While the Chicken Littles of the world economy, led by Gordon Brown, George Soros and Warren Buffett, may still repeat mechanically the IMF’s surprising judgment that the world - especially America - faces its worst financial crisis since the 1930s, their hearts are no longer in it. Mr Brown, after last week’s election woe, can no longer blame the world economy for his political failure. Mr Buffett, having speculated against the dollar for years and declared that credit derivatives are financial weapons of mass destruction, has finally begun to find attractive opportunities to invest his money and told his shareholders last week that the worst of the credit crisis was probably over. Mr Soros, in his forthcoming book, The New Paradigm for Financial Markets, states unequivocally: “We are in the midst of a financial crisis the likes of which has not been seen since the Great Depression.” But after making $3 billion for Quantum Endowment Fund by anticipating last year’s bear markets, he is now hedging his bets, as is only to be expected from the world’s most successful hedge fund manager. “I may well be proven wrong,” he told The New York Times last week, adding that he might yet again turn out to be “the boy who cried wolf”.

The main explanation for all this revisionism is simply the change in facts. The near-unanimity of a few weeks ago that the US was sinking into a deep, prolonged recession has been dispelled by recent data on jobs, GDP, business confidence, industrial orders and consumer spending – all telling a consistent story that although the US economy weakened abruptly last autumn, it is not nearly as weak as at the start of previous recessions, and that there have been no signs of further deterioration since February in the key economic variables apart from house prices.

Moreover, the time of greatest risk of a US recession is almost past, since tax rebates worth more than 1 per cent of disposable income will start landing in US taxpayers’ bank accounts from this week, almost guaranteeing that consumer spending will pick up, at least temporarily, in the year’s second half. And just as the stimulus to consumption from tax cuts runs out, benefits of the Fed’s big cuts in interest rates should start to be felt fully in the first few months of 2009. So, it is increasingly likely that the US economy will not experience even a minor recession, at least as defined in the official statistics, as a result of the credit crunch last year.

Even more important than the relatively benign statistics is the news from the financial markets. Signs that the worst of the banking crisis may be over appeared to be confirmed by rallies in financial markets worldwide last week. Financial markets’ better mood is partly related to stabilisation in US economic statistics. But mainly it is a consequence of radical steps by governments and central banks all over the world since it became clear that private financial markets would not resolve the credit crunch.

As a result of these government interventions, culminating in the Bear Stearns rescue and nationalisation of Northern Rock, one financial market after another has started to return to something nearing normality. Straight after the Bear rescue, there was a narrowing of credit spreads on top-quality securities such as government-backed mortgages in the US. Next, two weeks after liquidity returned to credit markets following the Bear rescue, the yield on US Treasury bonds stopped collapsing and reversed, implying that markets no longer saw need for panic cuts in US interest. In turn, the steepening of the US yield curve that followed the return of more normal conditions to the bond market helped to put a floor under the dollar two weeks ago. Finally – though this is still a more tentative conclusion - dwindling fears of a freefall in the dollar seemed to take some of the wind out of speculation in commodities and oil.

Of course, it is impossible to be sure of the sustainability of improvement in the four markets that have been causing all the trouble - credit, bonds, currencies and commodities. But what seems fairly clear is that the real economy of jobs, profits, investment and consumer spending in America has so far suffered almost entirely as a direct result of weaker housebuilding and construction employment – and not in response to the negative wealth effects and bank-credit contractions in the nightmare scenarios of Wall Street analysts.

To pessimists, this means that the worst is still to come, since the real consumer reaction to falling housing wealth and bank deleveraging has not even started. An alternative view more consistent with economic theory and historic experience was suggested by the Bank of England’s Stability Report last week: “Credit markets are likely to overstate significantly the losses that will ultimately be felt by the financial system and the economy as a whole . . . They will exaggerate to an even greater extent the potential damage to the real economy.”

As noted in that report, the pricing of many bonds and credit derivatives in financial markets already assumes bigger losses from US sub-prime mortgages and other dubious assets than anything implied by plausible worst-case scenarios. This is true of highest-quality credits, with AAA and AA ratings, whose unexpected collapse has done the greatest damage to bank balance sheets. The Bank’s sums suggest that the highest-quality mortgage-backed bonds are now undervalued by 25 per cent (see chart). It now seems that, contrary to the Chicken Little rantings of many analysts in the City and Wall Street, these bonds face almost no risk of serious defaults even in the event of far bigger falls in US housing prices than any that have happened so far.

Indeed, the Bank’s calculations suggest that present pricing of mortgage-related bonds in financial markets has probably overstated the future losses on US sub-prime lending by about double.

None of this means that the credit crunch has been a storm in a teacup, as I originally thought. Changing attitudes to borrowing and lending will have a dramatic impact on the world economy, reducing long-term growth in consumption in economies that have been driven by powerful housing and mortgage cycles, including Britain, Spain and France. As Mr Soros says in his book, global growth can no longer rely on these economies and must depend on consumption and infrastructure investment in China, India and other emerging markets. These are momentous changes, and while they are quite far advanced in America, they have hardly started in Britain and Europe. But if economic news continues to deteriorate for a while - as it almost certainly will in the UK – investors and business should realise that the really important story in the world economy today is not the threat of a sudden collapse in the financial system, but a gradual long-term adjustment in the world economy in favour of emerging markets. This may at times be an uncomfortable process – but the sky will not fall in.

This is Anatole Kaletsky's Times Column for this week.

Labels: Anatole Kaletsky, credit crunch, global economy analysis, Gordon Brown, Warren Buffett

UK interest rates have been held at 5% as the Bank of England decided to focus on inflation risks, despite signs that the economy is slowing.

The rate freeze had been expected, although many analysts now predict that rates will be cut to 4.75% in June.

The decision came despite a flurry of downbeat data which added to worries about the state of the UK economy.

However, rising fuel and food prices means that inflation is ahead of the government's target.

'Recession risk'

"The latest data shows the economy is slowing, albeit only gradually, and at the same time inflationary pressures continue to mount," said Ian McCafferty, chief economic adviser to the CBI business group.

"The Bank faced a difficult decision, but it is no surprise that rates were kept on hold this month."

Meanwhile the body representing Britain's manufacturers, the EEF, said that the decision to hold rates was only delaying the inevitable cuts.

"The economy has been through a series of shocks since the credit crisis hit last summer and the Bank has been right so far in responding with a measured approach on rates," said the EEF's chief economist, Steve Radley.

The moment the rates decision was announced

"However, despite concerns on inflation, further cuts to interest rates are needed to prevent the economy from drifting towards recession."

The British Chambers of Commerce (BCC) argued that a rate cut would have underpinned business and consumer confidence and helped limit the potential damage to the economy.

"This decision was a mistake given the serious threats to economic growth," said BCC adviser David Kern.

Roger Bootle, economic adviser to Deloitte, said that by leaving the rate on hold, the Bank's Monetary Policy Committee (MPC) risked "presiding over the deepest and longest economic downturn since the recession of the early 1990s".

Mr Bootle predicted that rates would fall to 3.5%, or possibly lower, but that the moves would be "too late to prevent the economy from flirting with recession".

Speculation

Homeowners had been hoping for rate cut which - if it had been passed on by lenders - might have seen some people's mortgage payments reduced.

However, the credit crisis has made funding mortgages trickier for banks, and when interest rates were cut to 5% from 5.25% last month, not all lenders passed on the full reduction to borrowers, despite government pleas.

Negative manufacturing and service sector data released this week had led some to speculate that the Bank might decide to cut rates this month.

Office for National Statistics data showed that manufacturing output fell by 0.5% in March, the sharpest rate of decline in six months.

The figures followed data released earlier this week by the Chartered Institute for Purchasing and Supply which suggested that the UK services sector grew at its slowest rate in nearly five years in April.

The most recent available data showed that Consumer Prices Index inflation was 2.5% in March, holding steady from February, but well ahead of the government's 2% target.

On Wednesday, the British Retail Consortium said food prices in April were up 4.7% compared with a year ago, although falling prices of non-food items meant that shop prices overall were up by 1.2%.


Original article at BBC Business news.

Labels: credit crunch, Deloitte, UK Interest rates

With so much media speculation about a housing slump and the dreaded credit crunch, we thought it might be useful to do a feature with just plain simple facts. With that in mind here's an overview of the current state of play in the UK housing market:

Average Cost: £218,594
Detached: £342,895
Semi-detached: £197,833
Terraced: £174,208
Flat: £201,424
Change in last quarter: -1.65%
Change in last year: +3.7%
Sales: 167,050

Figures courtesy of the BBC.

For more data on the mortgage market, see the results of a new Times survey, published this week.

Labels: House market, market data, property prices

Knight Frank report says average prices rose 13% over the past year; compared to 5% British average.

THE Scottish housing market is set to defy the credit crunch and will continue to outperform the rest of the UK, according to a new report.

High rates of employment in the financial sector and sustained demand among young professionals for mid-priced city centre homes should mean that Scotland will escape “relatively unscathed” from the turbulence in the global financial markets, according to the study by estate agents Knight Frank.

The firm's analysis of house prices over the past year has revealed that they rose by 13% in Scotland, the biggest increase outside Greater London. Across the UK, the average price rise was 5.2%. The cost of new homes in Scotland rose by 20%.

While the credit crunch caused by subprime lending in America will dampen the market, the report predicts that prices in Scotland will continue to rise this year, bucking the trend across the rest of the UK.

Knight Frank's Scottish residential review predicts average house price inflation of 1% in Scotland, while prices elsewhere are expected to fall by an average of 3%.

“In Scotland the market is not as volatile as the rest of the UK, it doesn't have the same boom and bust culture,” said Liam Bailey, Knight Frank's head of residential research, who compiled the report.

“You don't tend to get the kind of speculation you get in the rest of the UK and that makes Scotland a healthier market.

“At best price growth will be 2-3% for this year and sales volumes will be down about 20%, but it's not a crisis.”

Bailey said a number of factors would protect the Scottish housing market from the downturn predicted for the rest of the UK.

These include the greater availability of social housing, fewer owner-occupiers, the strength of the financial sector - where the number of people employed directly has increased by over a third over the past seven years to more than 113,000 - and higher levels of employment.

The proportion of people of working age in employment rose in Scotland to 76.5% last year, 2% above the UK rate.

Gwilym Price, professor of urban economics and social statistics at Glasgow University and chairman of the Scottish Housing Economics and Finance Network, is in agreement with the report's findings: “The credit crunch is very new territory and difficult to anticipate but I don't think we will see a house price crash in Scotland,” he said.

Original article posted on TimesOnline

Labels: House market, Knight Frank, Scottish property market

Taking the temperature of the property market can be a tricky but when estate agents talk of a buyers' market those hoping to bag a good deal should listen up.

With agents dropping prices, auctioneers setting lower reserves and a slump in property confidence taking hold, buyers are now firmly in the driving seat

Experts agree the heat has gone from the property market, after two robust years of price rises following the mini-slowdown of 2005.

The National Association of Estate Agents reported just five homes per agent were sold on average in December 2007, compared to eight per agent in December 2006.

Putting a positive spin on the slowdown, it said: 'For those choosing to enter the market now, there is plenty of opportunity.'

However, if buyers can purchase without over reaching themselves and are willing to accept their asset may dip in value, the upcoming months represent an opportunity to test a soft market and perhaps bag a bargain home.

Full article continues at thisismoney.com

Labels: House market, property boom, thisismoney

RECENT DAYS have witnessed some extraordinary developments, most of them from the Bank of England. Time was when months would go by without a peep from the Old Lady. Now it has become a news-generating machine that Max Clifford would be proud of.

Development one was Mervyn King’s attack on the City’s reward culture, which many will applaud, though some would say a bit of performance-related incentive is a good thing. The governor’s salary of just under £282,000 — small in relation to many City salaries though with a pension pot of nearly £4m — rises 2% a year, come what may. That gives him an incentive to keep inflation on target but doesn’t reward or punish him beyond that.

Development two was a speech by David “Danny” Blanchflower, one of King’s colleagues on the Bank’s monetary policy committee (MPC). This was, it is safe to say, the most doom-laden speech ever from a UK policymaker, warning that Britain was likely to follow America into recession (whether the US is in recession is still open for debate after first-quarter numbers showed growth), that a fall in house prices of a third in two to three years “does not seem implausible” and the risk of something “horrible” arising from the credit crunch was significant.

Compared with the coded language normally adopted by anybody with anything to do with the Bank, this was a revelation. Blanchflower spends half his time in America and that may explain his gloom, but even there central bankers are a bit more guarded in their language. I am surprised this one got past the censors.

“Developments in the UK are starting to look eerily similar to those in the US six months or so ago,” he said. “There has been no decoupling of the two economies: contagion is in the air. The US sneezed and the UK is rapidly catching its cold.” I’ll return to that.

Development three, hard on the heels of this blood-curdling warning, was the apparent declaration from the Bank that the credit crisis was over and that banks should come out of their shells and start lending again.

This was not quite what its financial stability report was saying: that some gloom in financial markets may have been overdone, in that the scale of losses assumed in US sub-prime assets, a 40% default, looks too pessimistic. Financial markets are assuming many such assets are worth nothing, while on conservative assumptions, and allowing for further falls in American house prices, they are worth something.

Article continues at TimesOnline

Labels: Bank of England, House market, Mervyn King, property boom

Investment guru Warren Buffett says the worst of the global credit crunch is over for Wall Street, but not for the man or woman on the street.

The chief executive of Berkshire Hathaway said there would be "a lot of pain to come" for mortgage holders.

He made the comments as Berkshire Hathaway's annual meeting got under way in Omaha, Nebraska, attended by a record 31,000 people.

The meeting has become known as "Woodstock for Capitalists".

Mr Buffet's investment decisions often go against the market and are followed religiously by many.

However, Berkshire Hathaway, the company Mr Buffet took over in 1965, has not escaped the credit crisis.

It saw its first quarter profit tumble 64%, hurt by losses tied to derivatives contracts and a steep slide in insurance premiums.

"The worst of the crisis in Wall Street is over," Mr Buffett told Bloomberg Television shortly before the weekend meeting began.

"In terms of people with individual mortgages, there's still a lot of pain left to come," he added.

Succession fears:

Mr Buffett, ranked the world's richest man by Forbes magazine, praised the Federal Reserve's rescue of Bear Stearns.

He said the move avoided financial market chaos.

"I think the Fed did the right thing in stepping in on Bear Stearns," Mr Buffett said.

"Just imagine the thousands of counterparties around the world having to undo contracts."

The central bank helped broker the buyout by JP Morgan, after financial institutions became reluctant to lend to Wall Street's fifth-largest investment bank.

At the meeting, Mr Buffett also tried to reassure shareholders that Berkshire Hathaway would be fine once he had gone, but the 77-year-old billionaire offered few new details of the company's succession plan.

Berkshire Hathaway has stakes in American Express, Coca-Cola, Wal-Mart Stores and Tesco.

Original article here.

Labels: Berkshire Hathaway, credit crunch, global recession, wall street, Warren Buffett