Weekly Summary: 22nd September 2023

DATA: Rightmove reported asking prices fell 0.4% in year to September

They also reported “36.3% of properties currently for sale have had a price reduction” and “The number of sales being agreed in August across all property types drops to 18% down versus August 2019”.

DATA: ONS reported UK house prices rose 0.6% in year to July

The completions-based index reported a negative annual change in London (-0.8%), the South West of England (-1.0%), and Wales (-0.1%).

DATA: ONS reported UK private rents rose 5.5% in the year to August

It is worth noting the indices for England and Wales are based on achieved rents while the index for Scotland uses data that is “predominantly for advertised new lets” and the index for Northern Ireland uses data for advertised new lets.

DATA: ONS published house price statistics for small areas

This release will be the last one as the series has been discontinued. Anyone requiring these tables can recreate them from the Land Registry price paid data.

DATA: ONS published Stamp Duty Land Tax receipts data for August

The data, covering both residential and commercial properties, shows total receipts were still 27% lower in August 2023 than the same month last year.

POLICY: Bank of England held Bank Rate at 5.25%

POLICY: Number 10 launched “new approach” to Net Zero

Rishi Sunak announced the scrapping or delay of several green policies, including some imaginary ones.

REPORT: House of Lords Built Environment Committee reported on the impact of environmental regulation on development

They report “The Government needs to show a strong display of political leadership to deliver and implement a comprehensive strategy for both development and the environment” and “Housebuilding targets should be given statutory weight, giving them an equal status with environmental goals”.

REPORT: NatCen published 40th edition of British Social Attitudes survey

The report includes chapters on age differences, the evolution of the gender gap, role and responsibilities of government, poverty, social class, and gender roles.

REPORT: BoE published Agents’ summary of business conditions

On housing they report “that higher mortgage rates had been the main factor in a further weakening of housing market activity. Demand was lower than supply for the first time in a few years and seen as unlikely to pick up until mortgage rates stopped rising” and “Housebuilders said they were continuing to scale back their construction plans because of the weakening of activity and higher costs”.

REPORT: Resolution Foundation reported on productivity in Manchester

This report follows on from last week’s report on Birmingham.

REPORT: HBF reported on public perceptions on the housing crisis

They report 72% of respondents said central Government are most responsible for fixing the housing crisis and just 5% of respondents said housebuilders were.

REPORT: Savills reported on new build home buyers

Their analysis of “regional new homes dealbooks” shows a big increase in cash buyers.

REPORT: TwentyCi reported on the UK housing market

They report a monthly increase in properties for sale and fewer properties sold subject to contract in August though it’s difficult to know how much of this is seasonal.

CORPORATE: Henry Boot published half-year report

They report “There is no doubt that the rapid increase in short term rates is slowing the economy, reducing customer demand across our markets, and putting pressure, not least due to the funding costs, on the viability of residential and commercial schemes”.

Chart of the Week

While listed housebuilders are reporting weak reservation rates and housebuilding starts have fallen sharply (DLUHC Q2 data is due out next week), leading indicators for overall net supply are still looking relatively robust on an annual basis. DLUHC’s weekly new build EPC data still shows numbers tracking normal levels with over 236,000 in the year to beginning of September 2023. This might be lower than the 250,000 being reported at the start of 2023 but it doesn’t yet reflect the scale of slowdown reported by the housebuilders and seen in wider measures of activity. These figures have been further reinforced by the VOA’s release of council tax valuation list dwelling counts for September 2023. They show a net change in dwellings over the twelve months of 236,600, very similar to the EPC data. The chart below shows this net change by region with some variation over the last few years.

Weekly Summary: 15th September 2023

DATA: ONS estimated monthly GDP fell 0.5% in July 2023

This followed a 0.5% rise last month and GDP was unchanged over twelve months. These figures will be revised shortly as the Blue Book revisions to GDP are incorporated into the data. GDP will be higher relative to the pre-pandemic peak than previously reported.

DATA: ONS reported on the UK labour market

They report the employment rate in the three months to July was 0.5 percentage points lower than the rate in the three months to April. The unemployment rate increased 0.5 percentage points over the same period. They also report regular pay excluding bonuses increased 7.8% in the year to May/June but was only 0.6% when adjusted for inflation.

DATA: FCA published Mortgage Lenders & Administrators Return stats

The release provides a wealth of data on the mortgage market including our above linked slide deck, the FCA’s commentary, and the Bank of England’s commentary. See Chart of the Week for more on borrower incomes.

DATA(PDF): Hometrack published rental market index for Q3 2023

They report rents for new lets increased 10.5% over the year and “The UK rented sector remains stuck in a period of low supply and high demand”.

DATA: Bank of England published Inflation Attitudes Survey

The survey results show: “Asked to give the current rate of inflation, respondents gave a median answer of 8.6%, down from 9.6% in May 2023” and “Median expectations of the rate of inflation over the coming year were 3.6%, up from 3.5% in May 2023”.

DATA: Scottish Government published housebuilding stats for Q2 2023

The number of new build homes completed in the year to June was 23,346. This was an increase of 7% though the number of starts fell by 12% over the same period.

REPORT: FCA reviewed later life mortgage lending

They warned about financial promotions in the sector and the suitability of advice while reminding firms of the Consumer Duty.

REPORT: DLUHC estimated homes subject to nutrient neutrality

The research found “7.9% of new addresses created in England from 2015/16 to 2018/19 were created in areas affected by nutrient neutrality advice” and “this proportion represents an expected additional housing supply of 16,500 dwellings per year”.

REPORT: Homes England reported on measuring social value

The first report in a series reports on measuring the placemaking impacts of housing-led regeneration. The headline finding was “on average, housing-led regeneration projects are likely to have a positive wider placemaking impact on the surrounding area, which can be assessed through net house price effects”.

REPORT: Social Mobility Commission reported on State of the Nation

They found “a significant tightening of the link between parental home ownership and children’s home ownership” and suggest “your parents’ ownership of their home has become a much better predictor of whether or not you will own yours”.

REPORT(PDF): RICS published August Residential Market Survey

They report “Sales activity and prices remain under pressure due to elevated mortgage rates” and “Near-term expectations point to little prospect of any turnaround in the immediate future”.

REPORT: Resolution Foundation reported on Birmingham’s productivity

They suggest “that the housing supply in the BUA must increase far beyond current plans and be concentrated in areas well-connected to the most productive areas of Birmingham, entailing tough choices when it comes to land use and housing density”.

REPORT: NHF reported on potential impacts of the housing crisis

The report forecasts what the lack of a long term plan for housing could look like. They suggest a big increase in children living in temporary accommodation, rising social housing waiting lists, more spending on housing costs, and more homelessness.

REPORT(PDF): Create Streets reported on building homes on roads

The report suggests “Creating simpler human-scale streets could be a route to enhanced local productivity and prosperity”.

REPORT: HBF reported on unspent developer contributions

Their analysis of FOI responses suggest that “local authorities could be collectively holding £2.8 billion in unused home builder contributions, with an average of £8m in Section 106 Contributions held unspent per council”.

REPORT: Building Societies Association published property tracker report

The survey found the affordability of monthly mortgage repayments was the biggest barrier to property purchase. It also found “Less than one in five people think now is a good time to buy a home” and “Around one in four think house prices will fall in the next year”.

REPORT: Institute for Government reported on levelling up

They report “Central government is not set up to deliver this government’s promise – or Labour’s plans – to reduce regional inequality”.

BLOG: Bank Overground reported on the shrinking private rental sector

Their analysis shows “the UK private rental sector has likely been shrinking for at least the last two years, but less quickly than other indicators suggest”.

CORPORATE: Vistry Group published half year results

They report “The Group’s average weekly sales rate for the period was 0.86 (H1 22: 0.84) and excluding multi-unit transactions in Housebuilding was 0.67 (H1 22: 0.82)”.

CORPORATE: Redrow published final results

They report “Reflecting the macro-economic picture and the tougher sales market, our average private reservation rate per week for the year was 0.46 compared to 0.68 in 2022” and “As expected, the sales market over the summer has been challenging. This has resulted in sales per outlet per week for the first 10 weeks of the new financial year of 0.34 (2023: 0.61)”.

CORPORATE: Gleeson published year end results

They report “Economic uncertainty has continued to subdue the wider market over the summer months. Gleeson Homes’ net reservation rate for the 9 weeks to 1 September 2023 was 0.43 per site per week compared with 0.54 per site per week over the comparable period last year. Cancellation rates of 0.10 per site per week were unchanged from the comparable period last year”.

Chart of the Week

There are lots of different stories in this week’s MLAR data release (Digging Deeper) including details on the fall in lending by purpose (big falls in buy-to-let), more floating rate lending, and an increase in mortgage arrears. However, this week’s chart looks at the share of new mortgage advances and whether they were single or joint income borrowers. There’s already been a gradual shift towards joint income mortgages in recent years as affordability pressures have made it increasingly difficult to buy on the basis on a single income. But that trend has increased in recent quarters. While it may partly reflect the fall in buy-to-let lending, which tends to be recorded as single income, it is also yet another variable in the house buying equation that borrowers are stretching to afford current high mortgage rates.

Weekly Summary: 8th September 2023

DATA: Halifax reported UK house prices fell 4.6% in year to August

With prices falling 1.9% in the month, they report this was the “largest monthly fall since November 2022” and “Southern England and Wales seeing most downward pressure on property prices, Scotland showing greater resilience”.

DATA: BoE published average quoted mortgage rates for August

The latest release shows a slight fall in fixed rates (5 year fix at 75% LTV was 5.52% compared to 5.72% the previous month). However, both variable and revert-to-rates (SVRs) increased. The revert-to-rate hit its highest rate (7.85%) since December 1998.

DATA: DLUHC reported a fall in planning application in Q2

The release shows the number of applications for planning permission were down 14% compared to last year while the number decided were down 12% over the same period. It also shows planning authorities “granted 8,000 residential applications, down 8% from the same quarter a year earlier”.

DATA: ONS published UK housebuilding data for Q1 2023

Unfortunately, this release presents misleading figures for housebuilding given the undercount in delivery that exists in the underlying data used to create the statistics.

DATA: ONS published Census 2021 migration statistics

Unfortunately, this is another release that is compromised by the timing of the Census and the impact of the pandemic. It should have been delayed by a year like Scotland.

POLICY: DLUHC published HHSRS review summary report

The review of the Housing Health and Safety Rating System proposes a simpler banding of the results, publishing indicative baselines, and updated guidance.

REPORT: DLUHC reported on damp and mould in the private rented sector

The findings, based on local authority provided data, suggest 3.6% of properties have category 1 damp and mould hazards. However, the report notes: “Several local authorities noted that a register or database of private landlords would help them to know where private rented sector properties are. They also reported that they often rely on tenant complaints to identify private rented sector properties, and tenants may be reluctant to complain about damp and mould due to fear of retaliatory action by landlords”.

REPORT: ONS reported on the student experience of the rising cost of living

Using interviews, the report highlights how the rising cost of living is affecting students in higher education. It shows students struggling to pay bills, cutting back on food, and working extra hours, sometimes in multiple jobs.

REPORT: Resolution Foundation updated The Living Standards Outlook

They project “zero real growth for the median non-pensioner household income in the 2024-25 election year” and warn that “around half of the mortgage cost rise is still to come, while around 90 per cent will have fed through by Q4 2024”.

REPORT: HBF published housing pipeline report for Q2 2023

This report is covered in the Chart of the Week below.

REPORT: Demos reported on home improvement’s impact on health & care

They find “a modest programme – one that would cost around a few hundred million pounds per year – could lead to health benefits of around £6bn a year”.

REPORT: TwentyCi published Homemover Pulse summary

They report a 1% increase in new listings compared to last month and a 1% fall in properties sold subject to contract over the same period.

CORPORATE: Barratt Developments published full year results

They report: “Since the start of the new financial year [1st July] our net private reservation rate per active outlet per average week for the period to 27 August 2023 was 0.42 (FY23: 0.60). This reflects both traditional seasonality but also the continued affordability challenges faced by potential homebuyers. During the period there was minimal impact from sales to the private rental sector and registered providers of social housing, which contributed 0.02 (FY23: 0.05) to the reservation rate”.

CORPORATE: Berkeley Group published trading statement

They report: “In terms of the sales market, enquiries have stayed at similar levels over the last four months, but the value of underlying private sales reservations is some 35% below last year’s rate, reflecting the elevated macro-economic and political volatility. Pricing remains resilient and above our business plan levels, due to the constrained supply of both new-build and second-hand homes to the market, while cancellation rates are stable”.

Chart of the Week

The latest HBF update on homes granted planning permission in England shows the number approved during Q2 2023 was 14% lower than the previous quarter and 11% lower than the same quarter last year. This took the annual figure down to 265,223, its lowest level since 2015 (though the data is subject to revisions). This decline clearly shows the 300,000 annual housing target is beyond reach in the near term but, more importantly, highlights the impact of the weakening housing market and higher mortgage rates on the prospects for housebuilding in coming months and years. Financial market reactions to the nutrient neutrality news may have been positive but if housebuilders and developers are selling fewer homes they will not need as many with planning permission.

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