Weekly Summary: 15th January 2021

DATA: ONS report 2.6% monthly fall in GDP during November lockdown

The fall in GDP during lockdown was inevitable but wasn’t as large as many had expected. The data will be revised in the future but shows the economy is 8.9% smaller than last year.

DATA: MHCLG report V-shaped recovery in Q3 housebuilding data

The data confirmed the housebuilding recovery already seen in the weekly Energy Performance Certificate data with new build completions just 1.1% lower than Q3 2019. This data is still less comprehensive than other sources so should not be used as an absolute measure of housebuilding activity.

DATA: RICS December Residential Market Survey reports “Sales market activity indicators remain positive albeit momentum continues to ease”

The report showed enquiries, instructions, and sales agreed were all positive though lower than seen in recent months. The London rental market continues to see negative tenant demand and negative rent expectations.

POLICY: FCA proposes extension of repossession ban to end of March

The existing guidance means firms should not enforce a mortgage repossession before the end of January. They now “propose extending this guidance so that firms should not enforce repossessions before 1 April 2021” due to the ongoing pandemic.

REPORT: JRF release UK Poverty 2020/21 annual report

The report “shows too many of us entered the pandemic already at risk of being cast adrift into poverty, while often lacking secure housing, a reliable income or adequate support”. Unfortunately, it also “shows that those of us already struggling to keep our heads above water have often been hit the hardest”.

REPORT: ESCOE on “Estimating the UK population during the pandemic”

The report highlights the challenges faced by ONS when trying to assess the impact of the pandemic on the UK’s population. Using “crude and illustrative” estimates, the report suggests the population may have fallen by 1.3 million people over the year. It also shows the impact has been greatest in London with large falls in non UK-born residents. Many of these people will have lived in the private rented sector and the findings appear consistent with the ongoing collapse in London rental demand and rents (e.g. see RICS above).

REPORT: Lichfields reverse engineer MHCLG’s top 20 cities

The blog looks at how the list of top 20 cities was derived for applying the 35% uplift to the Standard Method of calculating housing need and the issues with this approach.

Chart of the Week

Data from MoneyFacts in the chart below shows the scale of the mortgage credit crunch since the pandemic began. In March 2020 there were 779 fixed and variable rate mortgages available at 90% loan-to-value (LTV). This collapsed to just 70 in July. The latest data shows the number of available 90% LTV products has increased to 160 in 2021 but this is still 79% fewer than prior to the pandemic and the average rate is also much higher.

Weekly Summary: 8th January 2021

DATA: Halifax report house prices rose 6.0% in 2020

The annual growth rate fell slightly from November (7.6%) but still hit a record high.

DATA: Nationwide report house prices rose 7.3% in 2020

This was the highest growth in six years, up from 6.5% in November. They also reported high price growth for detached houses than flats.

DATA: Bank of England report a big rise in mortgage approvals for purchase

The number of mortgage approvals for house purchase in November 2020 was 61% higher than the same month in 2019. See Chart of the Week for more information.

DATA: Bank of England data suggests a peak in high LTV mortgage rates

Average mortgage rates fell slightly across most loan-to-value ratios but remain higher than before the pandemic.

POLICY: MHCLG announces “Government reforms make it easier and cheaper for leaseholders to buy  their homes”

The government announcement suggests that “Millions of leaseholders will be given a new right to extend their lease by 990 years” with no ground rent. They also announced they will be “reducing ground rents to zero for all new retirement properties”.

POLICY: Housing market remains open for business during lockdown

In theory the market remains open but businesses will be under pressure to ensure they are taking appropriate precautions which could prove a limit on activity.

REPORT: The Health Foundation: “Better housing is crucial for our health and the COVID-19 recovery”

The long read highlights the links between poor housing and health, and the need to “ensure that housing starts to make a positive contribution to health for more people”.

NEWS: NRLA: “Ministers need to get a grip of the rent debt crisis”

The joint statement with other campaign groups highlights the challenges faced by both landlords and tenants due to the pandemic. It urges government to help renters pay off arrears and avoid mass evictions when the pandemic ends.

Chart of the Week

The Bank of England reported data for November showing the highest number of mortgage approvals for house purchase since August 2007. This reflects the large number of sales agreed since the summer starting to reach completion and the next few months are likely to see continued high numbers. The data now means mortgage approvals in the year to November were just 2.4% lower than the same period in 2019. It is possible that when the December data is reported, total mortgage approvals over the whole of 2020 were the same or even higher than 2019, despite the shutdown in the housing market.

Market Commentary – 2020 Review

The Boris Bounce & Lockdown

The Crash That Never Happened & Housing Inequality

Stamp Duty Holiday & The Race For Space

What Happens Next

The housing market ended 2020 as it had started, with a boom in activity and prices. However, the rest of the year was rather more volatile thanks to the pandemic, but the much predicted bust never appeared. As we approach the end of the stamp duty holiday in March, there is considerable uncertainty about what happens later in the year. This note provides a brief review of the housing market in 2020 and looks ahead to what could happen next.

Continue reading “Market Commentary – 2020 Review”