Weekly Summary: 23rd February 2024

DATA: Rightmove reported asking prices rose 0.1% in year to 10th Feb 2024

They also report “Agreed sales in the first six weeks of 2024 are 16% higher than over the same period last year, and 3% higher than in the more normal market of 2019” but the average time to sell is “at its slowest since 2015, excluding the initial pandemic lockdown months of April & May 2020”.

DATA: ONS reported UK house prices fell 1.4% in year to Dec 2023

They report the largest falls were in London (-4.8%), the South East (-4.6%), and the East of England (-3.8%). They also continue to warn that low transaction numbers mean future revisions may be larger than usual.

DATA: ONS reported monthly GDP was unchanged in year to Dec 2023

The estimates show the monthly GDP index was the same in December 2023 as December 2022, though this data will get revised in the future.

DATA: ONS published UK labour market statistics

This was the first release with the updated Labour Force Survey data and reports “The UK unemployment rate (3.8%) for those aged 16 years and over decreased in the latest quarter, returning to the rate a year ago” while “Annual growth in total earnings (including bonuses) in Great Britain was 5.8% in October to December 2023, and annual growth in employees’ average regular earnings (excluding bonuses) was 6.2%”.

DATA: ONS reported UK private rents rose by 6.2% in year to Jan 2024

The index is based on all rents paid and this release is the last one before the introduction of the improved methodology.

DATA: ONS published private rental market data for London

The data covers 2023 and includes rents by number of bedrooms for postcode districts.

DATA: ONS published data on divorces in England & Wales for 2022

They report the lowest number and rate of divorces since 1971 when the divorce reform act came into effect.

POLICY: DLUHC expanded affordable home loan fund

They have increased the size of the Affordable Homes Guarantee Scheme by £3billion, taking it up to £6billion in total. The scheme helps housing providers access low cost loans funded “by a capital markets bond programme that has the benefit of a guarantee from the Department for Levelling up, Housing and Communities”.

POLICY: DLUHC prioritised brownfield development (again)

They report “every council in England will be told that they will need to prioritise brownfield developments and instructed to be less bureaucratic and more flexible in applying policies that halt housebuilding on brownfield land” and, following the speedy review of the London Plan, they will introduce a “brownfield presumption” with “The bar for refusing brownfield plans will also be made much higher for those big city councils who are failing to hit their locally agreed housebuilding targets”. They have launched a consultation on the brownfield proposals and another on changes to permitted development rights.

The model for developing high density brownfield sites is very different from the volume housebuilding model on greenfield land and much more reliant on debt and off-plan sales.

POLICY: DLUHC introduced new rules on short-term lets

The rules include planning permission for future short-term lets and a mandatory national register though “Homeowners can continue to let out their own main or sole home for up to 90 nights a year”.

REPORT: UK Finance reported on the Later Life mortgage market

They report a 37.1% fall in the number of new loans to older borrowers in Q4 2023 compared to Q4 2022. They also report a 40.1% fall in new lifetime mortgage and a 43.3% fall in retirement interest only mortgages over the same period.

REPORT: Centre for Cities reported on council tax reform in Wales

In response to the Welsh government’s consultation, they suggest “Ending the anchoring of tax rates around Band D”, “Revaluing properties annually”, and “Giving local councils responsibility for setting proportional tax rates for each council tax band in line with annual revaluations”.

REPORT: Lichfields reported on Welsh holiday lets and article 4 directions

They “explore a number of assumptions regarding the impacts of second homes and short-term holiday lets in Wales” and “review the potential consequences of the introduction of Article 4 Directions for the housing market, the tourism industry and for local authorities”.

REPORT: Savills reported on housing supply and need in cities

They report “Policy pitfalls preventing cities from delivering against a boosted housing need” and on the need for cooperation between cities and their surrounding authorities.

REPORT: Knight Frank reported on £1,000,000 property markets

Despite falling national house prices, they report “there were 11 areas in England and Wales that crossed that particular threshold in 2023” and they are “further from central London than 18 months ago”.

CORPORATE: Vistry reported Build-to-Rent framework with Sigma

The agreement with Sigma Capital Group builds on their existing partnership and will deliver 5,000 single family homes over five years for their Simple Life Homes brand.

CORPORATE: MJ Gleeson published half year results

They report “we experienced margin pressures arising from increased sales incentives, extended site durations and multi-unit sales. This has been exacerbated by additional costs on a number of older sites, which were brought to light by new management teams put in place following the organisational restructuring implemented last year”. They also report “Net reservation rates were 0.50 in the 5 weeks to 9 February 2024 (5 weeks to 10 February 2023: 0.46)”.

CORPORATE: Springfield published interim results

They report they are “carefully managing working capital and curtailing speculative private housing development by only commencing building homes when they are reserved” and “actively pursuing land sales to accelerate cash realisation from the Group’s large land bank”. They also report “the average weekly reservation rate since mid-January 2024 being 62% higher than for the Group’s financial year to that point”.

Chart of the Week

Last week ONS published updated data on monthly direct debit values and failure rates. The release shows the average mortgage direct debit value increased to £908 in January 2024, 11% higher than January last year and 25% higher than two years ago. Meanwhile, as usual following the Christmas period, the failure rate on mortgage direct debits spiked in January 2024, hitting 0.61%. This was compared to 0.50% in January last year. However, the failure rate on mortgage direct debits is relatively low compared to other bills. The failure rate in January 2024 was highest for Fitness Facilities at 4.74%, though this was well below the peak of 17.79% in January 2021, with loans in second place at 2.35%. The largest percentage point rise in failure rates has been for Electricity and Gas bills, rising from 0.24% in January 2021 to 1.50% in January 2024.

Weekly Summary: 9th February 2024

DATA: Halifax reported UK house prices rose 2.5% in year to Jan 2024

They report house prices rose 1.3% in the month and this was “the fourth monthly rise in a row”. However, they also report that prices in the South East fell 2.3% in the month.

DATA: BoE reported further falls in fixed rate mortgages in Jan 2024

The average quoted fixed-rate at 75% loan-to-value fell compared to the previous month while the variable rate and revert-to-rate was unchanged.

DATA: UK Finance reported rises in mortgage arrears in Q4 2023

The latest release shows the number of owner-occupier mortgages in arrears of over 2.5% of their balance increased to 93,680 in Q4 2023, a 24.6% increase compared to Q4 2022. The number of buy-to-let mortgages in arrears increased by 123.9% over the same period. Despite the large increases, the proportions of total mortgages in arrears are still relatively low at 1.07% for owner-occupiers and 0.69% for buy-to-let mortgages.

DATA: MoJ published mortgage & landlord possessions for Q4 2023

The release shows an increase in claims issued and total orders for mortgage possession compared to the same period in 2022, but the number of repossessions by county court bailiffs fell over the period. All landlord possession actions increased when compared to Q4 2022. They also report the rate of mortgage possession claims per 100,000 mortgaged home-owning households was highest in Westminster and Kensington & Chelsea. However, this result may be affected by the large number of mortgaged second homes and mortgaged private rented homes in those markets.

DATA: DLUHC published social housing sales and demolitions, 2022-23

The data for England includes Official Statistics in Development on net supply that show “For 2022-23, the figures show that local authority affordable housing stock for rent decreased by over 5,700 while the rental stock owned by private registered providers increased by over 20,300, an estimated net increase of nearly 14,600 affordable homes for rent for these providers combined”.

DATA: DLUHC published H2B equity loans for parliamentary constituencies

The data shows the number and value of Help-to-Buy equity loans for all buyers and for first time buyers by parliamentary constituency.

DATA: HM Treasury published Mortgage Guarantee data for Q3 2023

They report “There were 41,052 mortgage completions from scheme launch on 19 April 2021 to the end of September 2023, which represents 1.6% of all residential mortgage completions in the UK from the beginning of April 2021 to the end of September 2023” though the success of the scheme cannot be measured directly.

DATA: HM Treasury published Help-to-Buy ISA data for Q3 2023

While the scheme is closed to new accounts, existing holders can continue saving into their account until November 2029 and must claim by December 2030.

DATA: ONS reported on the reweighting of the Labour Force Survey

They report the “New weighting methodology revises down the employment rate, revises up the rate of economic inactivity, while the unemployment rate is revised up slightly”.

DATA: ONS published user requested Census data on household size

The two tables include one for all usual residents in households by age and household size and one for household reference persons by age and household size. Both cover LSOAs.

DATA: NHBC published housing supply data for Q4 2023

They report “Total new home completions down 12%, with a 20% drop in private sector” and “New home registrations drop by 44% in 2023, compared to 2022”. Unfortunately, these figures are affected by a declining market share over time.

REPORT(PDF): RICS published residential market survey for Jan 2024

They report “Metrics on buyer demand, agreed sales and new instructions all move out of negative territory”, and “Sales expectations improve further at the three and twelve-month time horizons”. They also report “House price declines continue to ease, with London seeing a largely stable trend emerge”.

REPORT: BoE reported on lender screening using a menu of contracts

The staff working paper suggests “When lenders screen borrowers using a menu of contracts, they generate a contractual externality by making the composition of their competitors’ borrowers worse”. Their analysis suggests “Counterfactual simulations show that, because of the externality, there is too much screening along the loan to value dimension”.

REPORT: BoE reported on mortgage affordability for re-fixing in 2023

They find “the ‘stress’ assessment carried out by lenders at origination will generally have subjected borrowers coming to the end of their fixed-rate terms in 2023 to higher stress rates than the prevailing mortgage rates when re-fixing”.

REPORT(PDF): IMLA published Intermediary Mortgage Market Tracker

The report covers Q4 2023 and provides useful data on the mortgage lending pipeline.

REPORT(PDF): BPF reported on the build-to-rent market in Q4 2023

The report is prepared by Savills and shows “The number of BtR homes complete, under construction, or in planning stands at just under 267,000” with 100,300 completed.

REPORT: ASI reported on “the costs of housing restrictions”

They estimate removing restrictions to allow the typical two-storey house to be replaced by an eight-storey development “would boost the welfare of every person by 6.5% if limited to London, and 11.7% if extended to all cities”.

COPORATE: Barratt published half year results

They report “The net private reservation rate per active outlet per average week from 1 January 2024 through to 28 January 2024 was 0.60 (2023: 0.49), including a contribution of 0.04 (2023: 0.01) from sales into the private rental sector and to registered providers of social housing”. They also announced they have “agreed the terms of a recommended all-share offer for the combination of Barratt and Redrow”.

CORPORATE: Redrow published half year results

They report “Our net private reservation rate per outlet per week over the first 5 weeks of calendar year 2024 was 0.52 (2023: 0.51)”.

CORPORATE: Grainger published trading update

They report “Like-for-like PRS rental growth 8.4% YTD” and “Occupancy 97.2% (PRS)”.

CORPORATE: Bellway published trading update

They report “an improvement in the private reservation rate during January to 0.59 per outlet per week (January 2023 – 0.45)”.

Chart of the Week

The latest ONS release of real-time indicators for economic activity and social change included the latest Dataloft data on average rents as a percentage of gross income for new tenancies. Based on the actual rental affordability of individual borrowers, the chart shows rental affordability has become increasingly stretched over the last twelve months, with the average rent as a percent of income hitting a high of 27.6% of gross income in January 2024 compared to 26.4% in January 2023 (though do note the y-axis doesn’t start at zero).

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